FCC Approves Softbank-Sprint-Clearwire Transactions

On July 5, the Federal Communications Commission released an order allowing the applications of SOFTBANK CORP. (“SoftBank”), its indirect subsidiary Starburst II, Inc. (“Starburst II”), and Sprint Nextel Corporation (“Sprint” and, together with SoftBank and Starburst II, the “Applicants”) to transfer control to SoftBank and Starburst II of various wireless licenses and leases, domestic and international section 214 authorizations, earth station authorizations, interests in submarine cable licenses, and cable television relay service station licenses held by Sprint and its subsidiaries, and the various wireless licenses and leases held by Clearwire Corporation (“Clearwire”). The Applicants also requested a declaratory ruling that it is in the public interest for the foreign ownership of Sprint and its licensee subsidiaries to exceed the 25 percent foreign ownership benchmark in section 310(b)(4) of the Communications Act of 1934 (the “Act”).

Based on the record and the FCC’s review of the competitive effects of the proposed transactions – the acquisition of Sprint by SoftBank and Sprint’s acquisition of 100 percent of the stock of Clearwire – the FCC finds that approval of the transactions will serve the public interest. The FCC notes at the outset that the investment by SoftBank in the U.S. market differs from wireless transactions in which two domestic competitors with overlapping service areas or spectrum holdings are seeking approval to merge, thereby eliminating an existing competitor. Rather, SoftBank, which has no attributable interests in any spectrum licenses in the United States, is seeking approval, inter alia, to use approximately $16.64 billion to purchase shares from existing Sprint shareholders, and plans to provide an additional $5 billion to Sprint that it can invest in its network and use to provide wireless broadband service.

The FCC finds that these proposed transactions are not likely to result in competitive or other public interest harms in the provision of mobile wireless services. In addition, the FCC anticipates that the proposed transactions likely will result in key public interest benefits, acceleration of deployment of advanced mobile broadband services and enhanced competition in the mobile wireless market, through the increased investment by Softbank in the Sprint and Clearwire networks.
Further, the FCC finds that the indirect foreign ownership of Sprint and its licensee subsidiaries by SoftBank complies with section 310(b)(4) of the Act. Finally, in response to petitions for reconsideration, the FCC affirms that the Wireless Telecommunications Bureau properly processed as pro forma the applications that were filed to effectuate the transfer of the shares in Clearwire held by Eagle River Holdings, LLC to Sprint. Thus, the FCC concludes that the transactions are in the public interest, and approves them subject to the conditions contained herein.