Did Sprint+Network Vision-Lightsquared = Sprint+Clearwire+Softbank?

I’ve been thinking about why Sprint has now decided to sell itself to Softbank.

It seems to me that one possible answer would be to blame Clearwire and then LightSquared.

Clearwire was to be Sprint’s first (but not last) 4G answer, but WiMax never took off.  In fact, the only thing about Clearwire that took off were some of its major investors, like Google looking elsewhere to invest and actually make money on the investment.

Comes then Lightsquared, with its grand plan to deploy 4G services to various existing carriers using a very odd frequency band adjacent to the widely-relied upon GPS downlink band.   Sprint loved its new 4G provider, especially since Lightsquared was to pay $9 billion-ish to Sprint to use the new Network Vision platform.  While Lightsquared would be free sell its services through other carriers, it would be in a sense captive to Sprint since it would be a major network platform provider for Lightsquared’s services.  It seems clear that Sprint’s Network Vision project moved forward, certainly in significant measure because of Lightsquared’s funding commitment.

Then came that nasty little GPS interference problem and sunk Lightquared, and resulted in a bankruptcy filing.

Sprint was left holding a $9 billion bag looking for another funding source for Network Vision.  Before Softbank, no major replacements had stepped up.  Sprint began shuttering Nextel sites as quickly as they could to reduce that ongoing lease load while pushing new Network Vision sites out into the field.

Not fast enough, apparently.

Now comes Softbank to offer up a huge capital infusion and other goodies for a 70% stake in Sprint.  And, Softbank is eyeing Sprint’s nearly-kaput first 4G love, Clearwire.  Word on the street is that Sprint, tracking Softbank’s longing eye, will try to take actual control of Clearwire, which was something denied it by the original investment agreement that kept Clearwire as a separate entity from Sprint.  That would certainly make Sprint’s current love very, very happy.

One thing for sure: The T-Mobile+MetroPCS and Softbank+Sprint+Clearwire equations equal big trouble for the rapidly-disappearing smaller regional wireless carriers.

It would not surprise me to see virtually no regional carriers, and only four major wireless carriers in the U.S.: Verizon, AT&T, T-Metro, and SoftSprint.  Following, I envision a T-Metro split-up shortly after it figures out that all it did was to replicate the dumb Sprint Nextel technically incompatible deal that started Sprint’s slide into the current Softbank sale.

Then there would be 3.   Then you’ll hear the pin dropping on the table.


Sprint’s Network Vision Project – A Game Changer

I’ve already typed a bit about Sprint’s Network Vision project from the perspective of landlords, but this topic certainly deserves much more coverage.

Certainly, Sprint’s initiative to deploy a new technology scheme that allows others to sublease transmission capacity at Sprint sites changes the game for everyone, especially site landlords with legacy leases that don’t bar non-physical subleases.

With the confirmation that Sprint and LightSquared have inked a deal for Sprint to use Network Vision sites to deploy LightSquared LTE transmissions (for $9B, thanks so very much), and the in-place deal for Sprint to host Cox’s PCS services, the Network Vision project is turning out to be the vehicle that will transmute Sprint into a carrier for carriers, as as well as a competitor to its carrier customers.

I’m betting it’ll be interesting to see how the law suits pan out if Sprint’s network ever crashes for its carrier customers, but not for its own Sprint and Nextel customers.

From a planning perspective, how this type of collocation is permitted will be interesting, if it’s even disclosed to the local government.  This new deployment scheme will have a huge impact on significant gap determinations and least intrusive means analysis, since it’s foreseeable that the carriers won’t want to disclose (all) relevant information about this type of shared use.

We’ll see…


NextG Networks sold to CrownCastle

This sale marks CrownCastle’s undisputed dominance of the Distributed Antenna System (DAS) market…for now. My prediction, however, is that we are seeing the peak of the DAS market, and that cable TV operators will become the new DAS leaders as they deploy wireless carrier services connected to their existing cable plant backhaul networks. More on this in a couple of days.

As for this sale, don’t forget that NextG is the owner of the basic patents in this field, which presumably will now be controlled by CrownCastle. Also, don’t forget that earlier this year CrownCastle purchased NewPath Networks, another major DAS provider (and a target of a NextG patent infringement lawsuit…I guess that’ll go away now.)

HOUSTON, Dec 16, 2011 (GlobeNewswire via COMTEX) — Crown Castle International Corp. CCI -2.21% announced today that it has entered into a definitive agreement to acquire NextG Networks, Inc. (“NextG”) for approximately $1.0 billion in cash (subject to certain adjustments). NextG, the largest provider of outdoor distributed antenna systems (“DAS”), currently has over 7,000 nodes-on-air and a further 1,500 nodes under construction. In addition, NextG has rights to over 4,600 miles of fiber. DAS is a network of antennas connected by fiber to a communications hub designed to facilitate wireless communications services for multiple operators. The acquisition will expand Crown Castle’s portfolio of DAS, providing additional wireless coverage and capacity solutions to customers beyond those areas traditionally served by towers. The acquisition is expected to close in the second quarter of 2012. Crown Castle expects to fund the acquisition with debt financing.

“Increasingly, we believe that small-cell architecture, such as DAS, will be an important complement to traditional macro tower installations,” said Ben Moreland, Crown Castle’s President and Chief Executive Officer. “We are very pleased with our anticipated acquisition of NextG, which furthers our ability to extend wireless infrastructure beyond those areas traditionally served by towers, thereby broadening our service offering in this growing market and positioning us to benefit from the continued demand for wireless data. We expect the impact to recurring cash flow per share from the contemplated acquisition and related expected debt financing to be approximately neutral at closing. Further, we believe this acquisition increases our growth rates and is accretive to long-term recurring cash flow per share.”

“Our agreement today is testament to the market leadership NextG has achieved over the past few years and to the increasingly critical role small-cell solutions, including DAS, have played and will play in the future to ensure reliable and comprehensive wireless infrastructure,” said Steven Moskowitz, NextG’s Chief Executive Officer. “I am proud of all that our employees have accomplished. We have significantly expanded our footprint, broadened our customer relationships, improved our network deployment efficiency, and continuously upgraded our technology and customer service. Our technology solution will be additive to Crown Castle’s industry-leading offering, and I am confident that NextG and its employees will be strong contributors to Crown Castle’s success for many years to come.”

Consistent with Crown Castle’s focus on the top 100 BTAs in the US, over 90% of NextG nodes are in urban and suburban locations, with 80% in the top ten US metropolitan areas, including New York, Los Angeles, Chicago and Dallas Fort Worth. The NextG assets are expected to provide significant growth, as they currently average only 1.25 tenants per network. Following the contemplated acquisition, Crown Castle expects to be the largest independent DAS operator in the US, with approximately 10,000 nodes and 26 venues in operation or under construction.

NextG is to be acquired from a group of investors led by Madison Dearborn Partners, a private equity firm. Madison Dearborn, Accel Partners, Redpoint Ventures and Meritech Capital Partners purchased NextG in 2009. NextG is being advised by Deutsche Bank Securities Inc., Kirkland & Ellis LLP and Kelley Drye & Warren LLP. Crown Castle is being advised by Cravath, Swaine & Moore LLP.

About Crown Castle

Crown Castle owns, operates, and leases towers and other infrastructure for wireless communications. Crown Castle offers significant wireless communications coverage to 92 of the top 100 US markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 22,000 and approximately 1,600 wireless communication sites in the US and Australia, respectively. For more information on Crown Castle, please visit www.crowncastle.com .

The Crown Castle International Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3063

About NextG Networks

NextG Networks is a market leader in outdoor DAS and other small-cell solutions, using fiber-fed systems to operate carrier-class wireless networks. With its proprietary fiber-optic architecture and expertise in public way access, NextG designs, permits, builds, operates and manages low power wireless networks. NextG’s distributed systems are protocol-neutral, enabling them to support multiple wireless carriers, services and technologies. NextG provides transport and backhaul services to wireless service providers over discrete, multi-frequency, scalable fiber networks that improve wireless service coverage, capacity and performance. With main offices in Boston, MA, and Silicon Valley, CA, NextG operates wholly-owned regional subsidiaries throughout the United States. For information, visit NextG Networks online at www.nextgnetworks.net .

About Madison Dearborn Partners

Madison Dearborn Partners, based in Chicago, is one of the most experienced and successful private equity investment firms in the United States. Since MDP’s formation in 1992, the firm has raised six funds with aggregate capital of over $18 billion and has completed approximately 120 investments. MDP invests in businesses across a broad spectrum of industries, including basic industries; consumer; financial services; health care; and telecom, media and technology services. Madison Dearborn has a long and successful track record of wireless-related investments, including MetroPCS Communications, Asurion, Omnipoint Corporation, Alaska Native Wireless, Clearnet Communications, Nextel Communications, Nextel Partners and Weather Investments. Other Madison Dearborn investments in the telecom, media and technology services space include Fieldglass, XM Satellite Radio, Intelsat and Univision Communications. For more information, please visit www.mdcp.com .

Cautionary Language Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based on Crown Castle management’s current expectations. Such statements include plans, projections and estimates regarding (i) the timing of closing of the contemplated acquisition of NextG (“Contemplated Acquisition”), (ii) funding of the Contemplated Acquisition, (iii) the utility and role of DAS and small-cell architecture, (iv) the impact of the Contemplated Acquisition on Crown Castle’s success and operating results, including growth rates and recurring cash flow per share, (v) growth opportunity of NextG assets, and (vi) Crown Castle’s relative position in the DAS market following the Contemplated Acquisition. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including prevailing market conditions and other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors that could affect Crown Castle’s results is included in our filings with the Securities and Exchange Commission. The term “including,” and any variation thereof, means “including, without limitation.”

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Crown Castle International Corp.


FCC Approves SoftSprintClear deals…Apparently

According to a Bloomberg report today citing unnamed sources, two of the three sitting FCC Commissioners have approved the big TwoFer:  Clearwire’s takeover by Sprint, and Sprint’s sale of itself to Softbank.

The decision, if in fact it has been made, has not yet been posted to the FCC’s web site.

Presuming the truth of the Bloomberg story, no one should be surprised by this massive frequency consolidation given Sprint’s Network Vision project.  These deals have been about access to bandwidth.

Bandwidth is everything.


Sprint to Clearwire: How ’bout a Bigger Dowry?

cleardishbrokenlogoSo, in the latest chapter of the SoftSprint-Clearwire-Dish matrimonial saga, it looks like SoftSprint will indeed take Clearwire to the alter.

Yesterday, Sprint (which had sued Clearwire just three days before to block the sale to Dish) decided to up its offer from $3.40 to $5.00, topping Dish’s offer of $4.40.

Just to make sure that Clearwire doesn’t take the ring off the finger one more time, Sprint’s amended marriage proposal contract with Clearwire provides for Clearwire to pay Sprint a break-up fee of $115 million should Clearwire get cold feet…again.

I have to imagine that there were some very interesting conversations between Japan and Kansas about what would happen to the value of the SoftSprint deal if Clearwire went off and married Dish.  Soft needs Clearwire’s frequency allotments to make its Sprint purchase ‘reasonable’…it didn’t need cash nearly as much.  Soft so much as signed that point exactly when it made noises yesterday about making a run for T-Metro if the SofSprint deal collapses.

Lest anyone be unclear:

  1. Clearwire is all about licensed frequencies for LTE; not WiMax, facilities or customers;
  2. Sprint only makes sense with Clearwire’s licensed frequencies; forget about the cash;
  3. SoftSprint only makes sense with Sprint’s sites being upgraded to Network Vision and getting control of Clearwire’s licensed frequencies.

There you go!



Jonathan Atkin on the pending T-Metro marriage

Jonathan Atkin analyzes the wireless sector for RBC Capital Markets, LLC.

Better put, Jon dissects the wireless sector, looking at the players, numbers, and technologies in multiple contexts and from multiple angles spotting nuances leading to a much deeper and more complete worldview of wireless.

I have had the pleasure of hearing Jon present at several AGL regional conferences, and I always walk away from his presentations with a much keener view of the wireless industry and its direction(s).

Jon released a research report a few days ago on the pending T-Metro marriage that is well worth reading and understanding. He summarizes his research this way:

Our initial take is that a potential business combination between T-Mobile and MetroPCS is of dubious merit for Deutsche Telekom under business conditions and public-market valuations. We expect few regulatory barriers to such a deal, and believe Sprint could benefit competitively.

Jon points out that the proposed T-Metro intermarriage is one of different transmission technology religions. This rules out quick systems’ integrations and synergies as each partner will continue to practice its own signal transmission religion for for foreseeable future. He cites Sprint as a much more suitable marriage partner for MetroPCS given that both of them practice the same signal transmission technology religion. (Hey, it’s my metaphor…go with it.)

Not mentioned in Jon’s analysis is that with Sprint’s deployment of its Network Vision project, that firm will be in a much better position to rapidly deploy MetroPCS services from the new Network Vision sites. This would allow Sprint to shutter some/many MetroPCS sites quickly, substantially reducing site lease rental costs, especially at existing collocated Sprint/MetroPCS sites.

The funny thing is that a Sprint+MetroPCS marriage would be much more likely to succeed compared with the disastrous Sprint+Nextel marriage, which, like the pending T-Metro marriage, is based on each marriage partner practicing a different and incomparable signal transmission religion.

Jon notes that even if the T-Metro marriage is consummated, the new shared life of those partners will be distracting early on in their new union, opening the door for Sprint (and Leap Wireless) to push forward. My gut feeling is that a consummated marriage between T-Mobile+MetroPCS will prompt a Sprint+Leap marriage.

Read Jon’s report by clicking here: Hello, Hello, Hallo – Thoughts on Potential DT/PCS Tie-Up.



Nextel kick’n ‘um on the way out…

As you may have heard, Sprint Nextel is shuttering a substantial number of its legacy Nextel iDEN tower sites.  These sites are no longer necessary in light of Sprint decommissioning of the Nextel iDEN service and combining technologies through its grand Network Vision Project (for more on Network Vision, click here).

For impacted Nextel tower site landlords, lease terminations translate to the loss of anticipated lease income.  This is why I tell my landlord-clients that they should always view most wireless leases as being enforceable for only months on the tenant side, but for decades on the landlord side.

Getting back to Nextel’s current round of terminations, to add insult to injury Nextel has employed third-party vendors to call and ‘convince’ landlords why, on the way out, they should execute a novel “Lease Termination Agreement and General Release” document.  I first heard about this from my peer, friend and trusted colleague, Mike Ritter, Esq. of TowerSeekers, a firm specializing in serving wireless landlords in the religious and non-profit segment.

So it seems that Nextel, when terminating a lease, would prefer to save lots of money by not removing most of the equipment, wiring, conduits, cables, and other things it installs.  Removal of these items is typically required by most wireless leases, as is returning the leasehold to the landlord in the same basic condition that existing just prior to the lease.  Nextel’s preference now seems to be to abandon the equipment in place and transfer title of the abandoned equipment, with no warranties whatsoever, to the site landlord.  With the abandonment goes all of the legal liabilities, as well, which may include liabilities imposed by the local governments on Nextel, but transferred by this agreement to the landlord.

Just sign right  here on the dotted line and YOU get to take on all of OUR discarded stuff and legal risks, and you save us a boat-load of money, too!‘ is just one way to think about this proposed deal.  Such a deal!

What’s even better is that BlackDot suggests in writing–but does not guaranteey–that they can find a replacement carrier quickly because these decommissioned sites will be “plug and play” solutions for other carriers…IF…the landlord will give up a 25% commission for the life of the revenue stream BlackDot can negotiate. Such a better deal!

‘Plug and play?’  Huh?   I’m a radio frequency engineer as well as an attorney. I don’t think much of the pitch is remotely believable.  By the way, if you’re interested in this deal, give me a call: I have a famous New York bridge for sale that’s priced for quick sale.

Take a look at a redacted copy of the Agreement document, here’s one.   If you’re half-a-lawyer, you’ll see why this deal is no deal at all.

If you are a Nextel landlord and you’ve received a notice of termination (as have some of my clients), go back and pull out your lease documents, including amendments.  Look at the termination terms and restoration terms.  (They may be in several places in the lease.)

Even if you don’t get the follow-up sales pitch call to do the exit agreement, do talk with your attorney.  If you don’t have one, I happen to know of some good ones!  Just call me on 310-405-7333, or give Mike a call on (760) 917-1123.




Sprint(ing) Forward to 800 MHz LTE

The FCC has granted Sprint’s request to allow it to deploy LTE services in its 800 MHz band assignments.

This is a big deal, both for Sprint and for LTE deployment as the de facto 4G-ish standard.

The FCC’s decision (found HERE) allows Sprint to re-purpose its Nextel 800 MHz spectrum (the old iDEN band) and bond it with Sprint’s 1900 MHz spectrum to create a ‘super LTE’ channel (my term, not theirs).  Mathematically, this is represented by the complex formula:

zoom(800,000,000hz) x zoom(1,900,000,000hz) = ZOOM(WOW)MBs

Okay, maybe that’s not a legit math formula, but you get the idea.  Bonding two high speed data bands is better than having two stand-alone high speed data bands.

This is a huge deal for Sprint as it continues to decommission its old Nextel iDEN services and sites as it deploys its Network Vision project.  Network Vision is Sprint’s ‘one-box-does-all’ base station solution that allows it to communicate on multiple bands and using multiple signal protocols for both itself, and for electronic collocators it will charge to deploy on its upgrade cell sites.

For the LTE community, the Commission’s decision signals its intent to relax the existing technical rules that current prevent deployment of 4G-ish services in the cellular and ESMR bands.  AT&T and Verizon will likely be even happier than Sprint by the ruling as it will give those firms a legal path forward to phase ultimately out cellular on 860 MHz and bond LTE with their other band assignments, especially 700 MHz.

(Bonding 700 MHz and 800 MHz services makes a lot of technical sense as the signal propagation of those two bands is similar, where the propagation of bonding 800 MHz to 1,900 MHz are dissimilar.)

For LTE-supporters, the Commission’s ruling is a much clearer path forward for dominance of that communications scheme given that the Commission’s door-opening will make LTE and LTE band-bonding even more important.


LightSquared files for Bankrupcy (Chapter 11)

     To the surprise of very few, LightSquared has filed for Bankruptcy protection under Chapter 11.

Given that the firm has virtually no path forward to use its frequencies to provide 4G-type services in light (no pun intended) of the apparently unresolvable GPS interference issues, Chapter 11 gives LightSquared a way to step back and see what it can salvage of their operations.

In a Chapter 11 bankruptcy proceeding, in most cases, the debtor remains in control of its business and operations as a “debtor in possession.” The day-to-day operations are subject to the oversight and jurisdiction of the federal court (and typically the trustee). The goals of a Chapter 11 proceeding is for the company to find the cash to emerge from bankruptcy having paid its creditors some portion of the amount due, cancelling or renegotiating some contracts, and then resuming normal operations after completing the bankruptcy.

It seems pretty clear to me that the $9B contract LightSquared entered into with Sprint will be a target for cancellation.  That will place even more pressure on Sprint to fund its Network Vision project.

A Chapter 11 bankruptcy proceeding is is very different from Chapter 7 proceeding.

In a Chapter 7 bankruptcy action the business ceases its regular operations.  The court-appointed trustee sells off all of the business’s assets and distributes the sale proceeds to the creditors. If there’s any money leftover after all the creditors are paid, that balance is returned to the owners/shareholders of the bankrupt company, and the company ceases to exist.

Sometimes a firm starting out on a Chapter 11 bankruptcy path can still end up shutting down.  It would not surprise me if that’s the case with LightSquared, especially if they are forced to sell off their licensed frequencies.

Time will tell.


Might Apple buy Sprint?

Okay, it sounds wild, but let’s look at this for a bit…

Sprint has committed $15B to Apple in connection with securing rights to market the iPhone to Sprint’s subscribers (let’s not talk about the newest Apple product, the iHeatingPad). That’s a lot of cash, and I’ll bet that Apple’s contract leave virtually no room for Sprint to get out from under the weight of an 800 pound Apple.

At the same time, the $9B Sprint was expecting from LightSquared seems to drifted away. This raises very serious questions about the future of Sprint’s touted Network Vision upgrade. As a result, Sprint’s plans to shutter some 30,000 cell sites, relying on the Network Vision project to make it possible…must have dropped to ‘maybe’ status, too.

Clearwire. That word has turned into a blackhole of cash for Sprint, and Google just helped further devalue Sprint’s, ah, majority investment by dumping the Google-held shares at a 90% write off. WiMax is not Sprint’s path forward–LTE is. Clearwire may be too late to Sprint’s party.

Sprint’s Board of Directors last month vetoed Dan Hesse’s plan to buy MetroPCS (for a 30% premium, no less). That puts Dan Hesse’s future outlook at Sprint at a 30% deficit (others say that number is even worse). Will there be new blood on the head of the pin, much less new confusions over the direction the pin is pointing? Hey, how about T-Mobile buying MetroPCS?

This month, Sprint seems to have tried…and failed…to get a network sharing agreement with T-Mobile, according to the Wall Street Journal. I guess that shots a hole in my idea about a SprinT-Mobile merger.

Let’s not forget the grandest of Sprint’s Grand Experiments: Nextel. Oh, you want to forget about that? Likely Sprint does, too.

With research firm Sanford Bernstein dropping its rating on Sprint, citing that Sprint might visit BK land, the Bad News Band keeps marching on. For a thoughtful look at this particular issue, see the SeekingAlpha story of March 20th by clicking here.

Now let’s consider Apple.

Apple has attained the status of a ‘mythical creature’ that can seemingly devour all that blocks it path.

Apple has been fanatical about controlling, to the n-th degree, every element of its users experiences with all of the Apple devices. It controls the look and feel of the user experience, and via the App Store all of the applications on iPhones that have not been subject to a jailbreak, as well as iPads of various operating temperatures.

It must peeve Apple that it decided to confine its iPhone and iPad devices originally on an exclusive basis to AT&T to run on that carrier’s less-than-robust and less-than-adequate-capacity network, and one that actually gave up spectrum in the failed T-Mobile love affair.

Now, at least, Verizon subscribers have a better chance at being able to enjoy close to 3G speeds with their iSomethings.

Oh, yes, there’s that cash reserve thing for Apple. It’s sitting on more cash than the U.S. Treasury, and since last Summer it has been the most valuable company you’ll find in the U.S., and maybe anywhere in the entire galaxy.

If Apple thinks about it, it can have its cake and eat it, too: Buy Sprint, fund and complete Network Vision, deploy 4G at real 4G speed, and dump all of the Sprint phones save for Apple iSomethings. Using the software defined radios of Network Vision, Apple can actually build a wireless network that is optimized for data (but still including the voice app that defines LTE). Siri may be the first step to Skynet, albeit with a programmed sense of humor. (How much wood can a woodchuck chuck? See here.)

For Apple, a Sprint purchase would yield it monthly cash flow that can be put back into expanding and optimizing the “Apple Wireless” Network Vision. And given Sprint’s majority ownership in Clearwire (and the 106ish MHz Clearwire controls in the U.S.), Apple would have a real playground to expand data capacity and speeds.

Maybe Apple might make apply the principles of the iTunes Store to Sprint to shift the marketing of Sprint services to the faceless online monolith. Buy a phone and activate service online. Forget about pins dropping.

It just seems right for Apple to continue its quest to control everything its users see and do with the iSomethings now and in the future by controlling its own data delivery network. At the same time, it can keep feeding iSomethings to Verizon, AT&T, and any other carrier that can’t afford to be left in Apple’s iDust.

With the passing of Steve Jobs, the direct minutia-level control he seemed to exert on Apple (at least according to Isaacson) has also passed. This may free up the current management of Apple to take the leap (no, not Leap Wireless) to controlling even more of the user experience, but from a new distance, all without asking “WWSD?”

Of course, Apple might buy T-Mobile instead–or as well–and do more or less the same thing, but that’s a thought best left for a future post.