Crest Financial, Dish Concerned About Parts of Sprint/Softbank Deal

"The Proposed Transaction will harm the public by preventing the full deployment of Clearwire’s spectrum and interfering with efforts to put this spectrum to its best use consistent with the public interest,” Crest said (http://bit.ly/15N4bSB). “Approval of the Proposed Transaction would entrust the single largest portfolio of United States spectrum to a license holder that has shown itself willing to keep spectrum underdeveloped and, by setting an artificially low benchmark price for spectrum, drastically undermine the Commission’s efforts to unlock additional spectrum through future transactions or auctions."

Crest submitted as part of its filing a report by economic consulting firm Information Age Economics (IAE), which said Sprint’s bid of $2.97 per Clearwire share attributes a value of just $0.21 per MHz/POP to Clearwire’s 2.5 GHz spectrum. The firm contrasted this to recent bids for what it says is comparable spectrum in the AWS band. In that band, IAE noted, Verizon Wireless recently paid SpectrumCo $0.695 per MHz/POP and Cox $0.563 per MHz/POP for their AWS holdings. “Clearwire’s spectrum is in fact easily and demonstrably worth at least $0.40 to $0.70 per MHz POP -- more than two or three times as much as the maximum value of Clearwire’s spectrum contemplated by the Proposed Transaction,” Crest said.

"As Clearwire’s proxy statement makes clear, after a rigorous and extensive two-year process of pursuing numerous strategic opportunities, including the sale of spectrum, Clearwire’s board and special committee unanimously recommended approval of Sprint’s definitive agreement to acquire Clearwire because it provides both the best value for shareholders and stability amid an uncertain future,” Sprint spokesman John Taylor said in response.

Meanwhile, Dish Network raised concerns about Japan-based Softbank’s buy of Sprint. “First and foremost, the transaction puts more U.S. spectrum than anyone else holds not only in the hands of one company, but in the hands of a foreign company,” Dish said (http://bit.ly/YvS9rA). Dish also notes that “applicants’ main argument in support of the transactions’ public benefits relies on SoftBank’s alleged record of strengthening competition and lowering prices in Japan.” But, Dish said, “densely populated Japan is a poor basis for comparison for the build-out challenges that wireless carriers face in a much larger geographic area such as the United States.” The deal is different than Deutsche Telekom’s buy of Voicestream, which led to the launch of T-Mobile USA, Dish said. “T-Mobile’s spectrum holdings were smaller than those of Sprint,” the filing notes. “Just as important, the nearly 12 years that have elapsed since ... have witnessed significant changes in circumstances -- principally, the emergence of spectrum-intensive mobile broadband rather than voice as the chief use for the spectrum involved,” Dish said. “Consequently, the Sprint-SoftBank transaction would have the effect of limiting potential new entry by U.S. companies to a far greater extent than the acquisition of T-Mobile by Deutsche Telekom."

Sprint and Softbank filed comments firing back at a petition to deny their proposed merger, filed by the Consortium for Public Education, and the Roman Catholic Diocese of Erie, Pa. (CD Jan 30 p7). Both raised questions “It is apparent that the Consortium in no way speaks for the EBS [Educational Broadband Service] community,” the carriers said. “To the contrary, two of the leading organizations representing EBS licensees -- the Catholic Television Network and the National EBS Association -- have stated that the Consortium’s ‘views are at odds with those of the EBS community as a whole."