Sprint Isn't Yet in the Clearwire
Sprint Nextel hopes to add to its airwaves. But the spectrum it aims to buy may keep it grounded.
The No. 3 U.S. wireless carrier offered $2.1 billion to acquire the 49% of Clearwire it doesn't already own. While it may end up having to pay more, its status as the only natural Clearwire buyer gives it negotiating leverage. And Sprint does need additional spectrum. More concerning, though, may be added investment needed to put that spectrum to use. Clearwire's spectrum has higher capacity than other swaths but requires greater cell-tower density to provide high-quality coverage. That isn't a problem in urban areas. But Sprint will likely need to invest in more towers outside major cities at a time when capital expenditures on its next-generation network are already running high. The added expense required to put Clearwire's spectrum to use in less densely populated areas could significantly cut into operating cash flow, according to Sanford C. Bernstein.