Sprint nabs control of Clearwire through the back door
The company won't acquire Clearwire outright, but has obtained enough shares to take majority voting power, and thus, control the company.
The drama between Sprint and Clearwire might finally be coming to an end.
The carrier announced today in a Securities and Exchange Commission filing that it has entered into a deal with Eagle River Holdings that will see it receive additional voting power.
Up to now, Sprint held 48.1 percent voting power, giving it substantial control but not enough for it to solely determine Clearwire's future. Eagle River Holdings has 2.3 percent voting power, and its chief executive, Craig McCaw, owns another 2.3 percent.
According to the filing, Eagle River Holdings will sell nearly 31 million of its 34 million Class A Common shares, as well as all of its 2.7 million Class B Common shares, giving Sprint more than 50 percent voting power over Clearwire and its board. Sprint expects to pay $100 million in the transaction.
Under the terms of the deal, Sprint will also hold more than 50 percent ownership over Clearwire's Class A Common Stock. In a quarterly filing over the summer, Clearwire revealed that Sprint owned only Class B Common Stock. In today's filing, the carrier assumes the conversion of 706 million Class B shares into Class A shares, giving it 50.8 percent ownership.
The deal between Sprint and Eagle River Holdings was rumored to be in the works yesterday. According to reports, Clearwire was a major sticking point in Softbank's recent announcement that it will acquire a 70 percent stake in Sprint for $20.1 billion. The Japan-based carrier reportedly said that it wanted Sprint to acquire Clearwire.
Clearwire, which offers 4G services to carriers and consumers in select markets, was viewed highly by Softbank, which wants to take advantage of the company's services, according to reports.
However, Softbank is one of the few companies to actually see value in Clearwire. After a multibillion-dollar investment by Sprint, Google, Intel, and Comcast propped up Clearwire in 2008, the company's goal of establishing a fully realized national wireless network never really materialized. Sprint's partner investors have largely bought their way out of Clearwire for fear of teaming with a sinking ship.
Sprint hasn't indicated how it will use its new majority ownership.
CNET has contacted both Sprint and Clearwire for comment. We will add their comments when we hear back from them.
This story has been updated throughout the morning.