Sprint is no longer the majority stakeholder in high-speed wireless company Clearwire, the company announced today.
On the surface, this may seem like a set-back for the third largest carrier, which relies quite a bit on Clearwire for both its 3G and 4G WiMax networks for service to its customers. But this might actually benefit Sprint in the long run.
Back in December, Sprint agreed to pay $1.6 billion to Clearwire in exchange for unlimited access to Clearwire’s WiMax wireless network, which is noticeably slower and much harder to upgrade than the LTE networks used by competing carriers AT&T and Verizon. The move allowed investors (including Sprint) to breathe a sigh of relief, dispelling fears that the company would declare bankruptcy because it didn’t have enough cash on hand to run the business. However, Sprint was forced to reduce its voting rights to ensure that it wasn’t at risk of defaulting on that debt.
With Sprint no longer the majority owner, the company will get more control and less consequence. “Now that our economic interest has fallen below 50 percent, we are reclaiming our full voting rights so that our voting rights and economic rights are once again aligned,” Sprint spokesperson Scott Sloat told Reuters.
Sprint badly wants access to a LTE network, but with the company’s current standing in the market, it understandably wants to reduce the risk associated with building it out. That’s why the company first contracted with LightSquared for access to its LTE network. When that deal fell through, Sprint turned instead to Clearwire — further helping push the company forward.