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Clearwire Mails Letter Urging Stockholders To Vote 'For' Proposed Transaction With Sprint

Stocks in this article: CLWR

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

- 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.

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.

  • 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. 

Misperception #3: Terms of Sprint Notes are Unfavorable

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