Wednesday, April 20, 2011

Sprint (S) Paying Clearwire (CLWR) $1 Billion in Fees

Sprint (NYSE:S) has come to an agreement with Clearwire (NASDAQ:CLWR) to pay the company $1 billion in fees to settle a dispute that had been affecting the revenue of the company to a degree.

Terms of the agreement are Sprint will pay $300 million in 2011 and $550 million in 2012. It also agreed to pre-pay $175 million for its high-speed, "4G" telecommunications services it plans to use this year and beyond. Sprint will also pay Clearwire $28 million to settle a pricing dispute.

Nomura Equity Research analyst Mike McCormack commented on the deal saying, "For Sprint, we view the agreement as a small positive, in that it allows the company some breathing room to continue discussions with LightSquared, while maintaining a 4G presence through Clearwire."

Essentially it "maintains the status quo" between the two companies, concluded McCormack.

The bigger positive from a shareholder point of view is this will relieve the concerns they had that Sprint may acquire all of Clearwire.

Clearwire closed Tuesday at $5.53, falling $0.25, or 4.33 percent. Sprint closed at $4.74, gaining $0.04, or 0.85 percent.

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