Clearwire Investor Will Ask FCC to Block Sprint Deals

Clearwire Corp. (CLWR) investor Crest Financial will ask the Federal Communications Commission to block Sprint Nextel Corp. (S)’s takeover of the company, as well as a separate deal between Sprint and Softbank Corp. (9984), saying they undermine the value of Clearwire’s airwaves.

The firm plans to file its complaint with the FCC before the Jan. 28 comment deadline on the two transactions, David Schumacher, general counsel for Houston-based Crest Financial, said on a conference call with reporters today. The low price Sprint is getting for Clearwire’s spectrum could hurt the value of other airwaves, making it a concern for the FCC, he said.

“Crest is optimistic that the FCC will take a close look at the transaction,” he said. “By artificially pushing down the price of Clearwire spectrum, Sprint and Clearwire threaten to devalue future government auctions of spectrum.”

Crest filed a shareholder lawsuit last month to stop Softbank’s $20 billion deal to acquire 70 percent of Sprint, saying it undervalued Clearwire, which is majority-owned by Sprint. After the Softbank deal was announced in October, Sprint moved to acquire the rest of Clearwire for $2.97 a share last month. Clearwire’s board signed off on the transaction.

“I doubt this kind of complaint from Crest is likely to derail the Sprint-Clearwire or Sprint-Softbank deals,” said Jeffrey Silva, a Washington-based analyst with Medley Global Advisors. “Third-party concerns about the impact on shareholder value is unlikely to move the needle much relative to the agency’s overall evaluation of the deals.”

Justin Cole, a spokesman for the FCC in Washington, didn’t immediately respond to a request for comment.

‘Best Path’

Mike DiGioia, a spokesman for Bellevue, Washington-based Clearwire, said the company doesn’t comment on pending litigation or the regulatory filing intentions of other parties.

Sprint and Clearwire reviewed their strategic options over the past two years and found the deal “delivers certain and attractive value for our shareholders, and was the best path forward,” DiGioia said.

Scott Sloat, a spokesman for Sprint in Overland Park, Kansas, called the Crest lawsuit “baseless and without merit.”

“This is the right transaction for Sprint and Clearwire shareholders, for American consumers and for the health of the U.S. wireless industry,” he said.

Sprint decided to acquire 100 percent of Clearwire after their four-year joint venture struggled to build a nationwide wireless network, leading to billions in losses for Clearwire. Sprint aims to take over Clearwire’s spectrum -- the airwaves that let mobile devices operate -- and use it to bolster its own network. Sprint Chief Executive Officer Dan Hesse said last month that the deal was “critical” to turnaround efforts at the third-largest U.S. wireless carrier.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net