Misperception #1: Multi-Customer Case (MCC) is Achievable
Reality: There is significant uncertainty in the achievability and timing of signing an additional wholesale customer of size. With or without a second major customer, Clearwire's funding gap is significant.
- MCC is only viable with another major wholesale customer in addition to Sprint;
- We have aggressively pursued the MCC for the past two years, and approached nearly 100 potential partners without success in securing a major wholesale partner in addition to Sprint; and
- Without interest from other significant potential customers, the ~$2 billion funding gap in the MCC quickly grows to the ~$4 billion funding gap in the Single Customer Case (SCC)
- The net proceeds from a sale of spectrum still would not be adequate to fund this shortfall and would not address the need for another large wholesale partner; and
Misperception #2: Implied Spectrum Valuation is Below Market Reality: Clearwire is unlikely to have buyer interest for all 47 billion MHz-POPs of spectrum above the $0.21/MHz-POP value implied by Sprint proposal.
- Clearwire has limited authorized shares available (fewer than 200 million) for new equity investments, and additional debt financing would likely be expensive and dilutive and create an untenable capital structure.
- Our exhaustive sale process in 2010 involved contacting 37 parties and did not result in an agreement;
- Since then, we have engaged in a series of conversations with a number of parties that did not result in any compelling offers, including a market check conducted in December of 2012; and
- Preliminary, conditional offers from DISH and Verizon are for premium portions of Clearwire's spectrum: the DISH proposal is for a portfolio comprised of primarily owned spectrum; and the Verizon offer is for leased spectrum primarily in large metro markets.