Clearwire's the Winner in This Deal

It's been a tenet of faith among investors that ne'er-do-well telecom Sprint (S) has had a long, uphill road in its battle against Verizon (VZ -0.53%) and AT&T (T 1.88%). Where its rivals had largely upgraded their networks, it was imperative Sprint had to do so if it ever hoped to convince users to buy the iPhone from it. The guarantee to Apple (AAPL 1.27%) Sprint would sell $15 billion worth of iPhones if only they would give it a crack at the market was seen as a Hail Mary pass to remain relevant.

The ugly, red-headed stepchild in all this has been Clearwire (NASDAQ: CLWR), which has been dependent on Sprint for sustenance. When Sprint began courting LightSquared for its proposed LTE network, Clearwire's WiMAX offerings were endangered, though they likely felt pretty smug when LightSquared went under. Despite extraordinary intervention on the part of the FCC as it tried to outmaneuver GlobalStar (GSAT -1.54%), Sprint came rushing back with full support for Clearwire and its new LTE network.

While analysts have often dismissed that anyone but Sprint would be interested in the network operator, the massive deal the telecom just agreed to with Japan's Softbank puts Clearwire clearly in play.

Clearwire snapshot

Source: FinViz.com. N/A = not applicable, CLWR does not pay a dividend.

On the field... finally
Sprint confirmed yesterday it was in talks with Softbank. The third-largest Japanese cell phone company is rumored to be interested in buying a 70% stake in Sprint, in a deal that could ultimately be worth $19 billion. With its discounted valuation, analysts say the carrier may have just been too cheap for Softbank to pass up since its designs are much larger than just the one deal; it's actually looking to gain access to wireless spectrum. That's where the catalyst for Clearwire comes in, as it's flush with spectrum. With the fastest LTE network available in the U.S., and the only one compatible with the LTE used by carriers in Europe, China, and India, Clearwire is likely the real target here.

Ever since T-Mobile announced its intention to buy Metro PCS (TMUS 0.57%), the market has been waiting to see what move Sprint would make. Indeed, by putting itself under control of Softbank, it may be setting itself up to be used to interfere with the combination and make a bid for Metro PCS itself.

Regardless of the endgame, Clearwire comes out ahead, and its 70% gain yesterday shows the market has renewed respect for the network operator. The money Softbank funnels into Sprint could always be used to pay off Apple should its iPhone guarantee not pan out, but it's also probable the carrier is going to use the cash infusion to build out its network, and Clearwire again wins.

It seems to me there's no way the operator loses here: it either gets backdoor support through Sprint, or Softbank comes through and buys it outright. This could be just the start of a big roll-up in the industry, one though that's been sparked by the depressed valuations.

But tell me in the comments section below what risks you see to Clearwire getting the resources it needs to move forward.