One year ago, when it looked like Clearwire's
Even though it reduced its control of Clearwire, Sprint kept a 54% economic interest in the company.
Not anymore. Sprint said on Monday that as a result of Clearwire issuing additional shares, the carrier has lost that majority economic stake. "Now that our economic interest has fallen below 50%, we are reclaiming our full voting rights so that our voting rights and economic rights are once again aligned," said Scott Sloat, a Sprint Spokesman.
The fates of both companies have been intertwined since Sprint tapped Clearwire to provide the nation's first 4G network using Clearwire's WiMAX network. It wasn't long, though, before Long Term Evolution, or LTE, technology came along. LTE provides much faster mobile broadband speeds, and Verizon
This development was a setback for both Sprint and Clearwire. The carrier needed to compete with the two top carriers, and WiMAX just wasn't cutting it. Sprint's decision to go with LightSquared and its ill-fated hybrid satellite/earth station LTE network to provide its 4G coverage left Clearwire dangling in the wind, wondering about its future with its largest wholesale customer.
Their relationship woes came to a head last December when Clearwire threatened to default on one of its loan interest payments. This was around the time that LightSquared's attempt to get FCC approval was foiled by that network's propensity to interfere with GPS signals, a sure deal killer. Sprint then began backing away from LightSquared.
Sprint had no choice but to make nice with Clearwire, at least tentatively. The companies came to an agreement at the 11th hour of Clearwire's loan default deadline, which provides for continued WiMAX service and funding totaling $1.6 billion through 2013.
Clearwire has since then been working on its own 4G LTE network and has expressed confidence in its ability to keep its head above water. But its future is still closely influenced by what Sprint does. Though Clearwire had no direct comment regarding the change in Sprint's shareholding stake, it did have something to say about the companies' ongoing connection.
"[O]ur relationship with them has not changed," Clearwire spokesman Mike DiGioia told FierceWireless. "We continue to work closely with them on the deployment of our LTE network. We value their position as our largest shareholder and largest wholesale partner."
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Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.