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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

October 15, 2012 at 4:04 PM

Sprint deal puts Seattle wireless back in play

Seattle really is getting yanked around by wireless merger mania.

Two weeks ago it looked like the future of the region’s largest wireless company, Bellevue-based T-Mobile USA, was secured by its planned merger with MetroPCS.

Now another local wireless company — Clearwire — is in play, and T-Mobile’s long-term future isn’t quite as certain.

Sprint, the nation’s third largest carrier, responded to the growing challenge from No. 4 T-Mobile by making its own deal, agreeing to be acquired by Tokyo-based SoftBank in a $20 billion deal.

The deal may give Sprint enough oomph to finally buy out Clearwire, in which Sprint owns nearly half. SoftBank’s announcement noted that it’s providing Sprint with $8 billion “for its mobile network, strategic investments and balance sheet.”

Investors expecting that will lead to a Clearwire sale have more than doubled its stock price since word of the Sprint-SoftBank deal surfaced last week.

Bellevue-based Clearwire declined to comment. After shedding about 3,400 jobs in recent years, the company is down to about 900 employees, including 400 or so locally.

Sprint had suggested that it may try to outbid T-Mobile for MetroPCS, which would derail T-Mobile’s plan to use MetroPCS as a vehicle to become a publicly traded company.

If the Sprint-SoftBank combination succeeds, the two could be in a position to also acquire T-Mobile, creating a more direct challenge to market leaders AT&T and Verizon Wireless.

Chetan Sharma, an Issaquah-based wireless industry analyst, believes it’s just a matter of time.

“At some point T-Mobile and Sprint need to get together to formulate a credible No. 3 in the U.S. market,” he said.

If Sprint acquires MetroPCS, it will put T-Mobile in a weaker position and lower the price Sprint would eventually pay for T-Mobile, Sharma said.

But Sprint’s management may not have the appetite for another big deal right now, leaving MetroPCS to T-Mobile, he added.

Sharma also believes that Clearwire’s sale to Sprint is inevitable. It may not happen for a while, though, because there aren’t any other suitors lined up for the company.

Sprint may covet Clearwire’s large spectrum holdings, but doesn’t need them immediately. Sprint now has enough spectrum to complete its deployment of LTE technology and reach 250 million people with the new service, spokesman John Taylor said via email.

Sprint already has committed $1.6 billion to Clearwire, under a renewed partnership the companies announced last December. In that deal, Sprint boosted Clearwire’s finances, assuring that Clearwire could proceed with its 4G LTE rollout, similar to what SoftBank’s now doing for Sprint.

Clearwire, in turn, is going to provide extra LTE capacity that Sprint could tap in major metro areas.

Don’t write T-Mobile off just yet, though.

Tables could turn if Sprint stumbles with the SoftBank merger. It’s a complicated deal, the economy could turn and Sprint fumbled its 2004 merger with Nextel, Sharma said.

“Then maybe T-Mobile acquires Sprint,” he said. “You just don’t know how markets are going to play out.”

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