Clearwire’s difficult past few years have included funding shortages, mass management changes, tech issues, market encroachment by Verizon and AT&T and a sinking share price all of which add up to continuing speculation about the company’s future. Now, according to Bloomberg, cable operators including Cablevision, Cox and original Clearwire investors Time Warner Cable and Comcast are discussing with majority Clearwire owner Sprint strategies to prop up (rescue?) the company. Possibilities include cash investments in Sprint, which could then turn around and pour additional funds into Clearwire, or a large-scale acquisition of Clearwire shares, which gained 30.3 percent Friday on all the speculation to close at $3.01.
After chopping through all the chatter and nuance, one key question remains: do cable operators really require a concerted wireless broadband push right now? Consider that Cablevision, Time Warner Cable and Comcast are having success with Wi-Fi in the northeast and elsewhere, Cox offers wireless voice/broadband services in many markets and adoption of Clearwire-based mobile broadband options from cable has largely been disappointing.
“As we said on a couple of calls, our results in terms of actual customers so far are not terribly exciting,” said Time Warner Cable President and CEO Glenn Britt during the MSO’s 2Q earnings call. “So the evidence so far is there is not a big profit for the quadruple play.”
Even AT&T has said customers aren’t clamoring for a quad-play bundle. Wells Fargo Securities’ Marci Ryvicker sees opportunity in such an offering, however, and said “a deal with Sprint (and thus access to a 3G/4G LTE network) would be a superior wireless solution for the cable MSOs.”
Indeed, LTE has proven superior to Clearwire’s WiMAX technology, to the point that Clearwire wants to spend $600 million to convert its network to LTE. (For more, see Surprise, Surprise: Clearwire Goes LTE).
BTIG’s Richard Greenfield, however, believes cable owns enough of a competitive advantage with wireline high-speed data that grand-scale wireless isn’t a necessity.
On the finance side, BTIG’s Walter Piecyk contends it would take more than $10/share to take control of Clearwire given all the partners involved. He also noted Sprint’s plan to discuss its 4G strategy on Oct 7, so a definitive deal may soon surface, including one that could include assets from cable’s Spectrum Co.