January 10, 2013 / 5:52 PM / 5 years ago

TEXT - S&P may still raise Sprint Nextel ratings

Overview
     -- Clearwire Corp. announced it has received a proposal by satellite-TV 
provider DISH Network Corp. (BB-/Positive/--) to purchase about 24% of 
Clearwire's spectrum for $2.2 billion.  
     -- DISH will also try to acquire at least a quarter of Clearwire's common 
stock for $3.30 per share with certain governance rights. 
     -- Ratings for Clearwire and  majority-owner Sprint Nextel Corp.   
remain on CreditWatch with positive implications.


Rating Action
On Jan. 10, 2013, Standard & Poor's Ratings Services said that the 'B+' 
corporate credit rating, and all other ratings, on Overland Park, Kan.-based 
wireless carrier Sprint Nextel Corp. remain on CreditWatch with positive 
implications. The ratings were placed on CreditWatch on Oct. 11, 2012.

Additionally, our 'CCC' corporate credit rating, and all other ratings, on 
Bellevue, Wash.-based wireless carrier Clearwire Corp. remain on CreditWatch 
with positive implications.

Rationale
Our CreditWatch listing on Sprint Nextel followed the announcement that it was 
in talks to sell all or part of the company to Japan-based SoftBank Corp. 
Subsequently, on Oct. 15, 2012, Sprint Nextel announced its signed agreement 
to sell a 70% stake in the company to SoftBank for about $20.1 billion, which 
would include an $8 billion cash infusion.

We placed our ratings on Clearwire on CreditWatch with positive implications 
on Dec. 13, 2012, after Sprint Nextel signed an agreement to acquire the 
remaining 49% stake in Clearwire that it did not already own for about $2.1 
billion plus the assumption of debt.

Today's CreditWatch update follows the announcement that Clearwire received a 
proposal by satellite-TV provider DISH to purchase about 24% of Clearwire's 
spectrum for $2.2 billion. It will also try to acquire at least a quarter of 
Clearwire's common stock for $3.30 per share with certain governance rights. 
Additionally, the two companies would enter into a commercial agreement that 
would enable DISH to use Clearwire to help build and operate a network, and 
DISH would provide Clearwire with financing to fund its own network build and 
near-term operating losses. The Clearwire spectrum would cover approximately 
11.4 billion MHz-POPs. The bid for Clearwire's equity is higher than the $2.97 
per share price that Sprint agreed to with Clearwire to acquire the remaining 
stake in Clearwire that it did not already own.

While the ultimate outcome of the proposed transaction is difficult to 
determine, we believe that there are significant hurdles for DISH to overcome 
in its bid for Clearwire. Under the current merger agreement with Sprint 
Nextel to buy the remaining stake in Clearwire that it does not already own, 
Clearwire is prohibited from selling spectrum assets without Sprint Nextel's 
consent. The equity holders' agreement further places constraints on a 
spectrum sale. Also under the equity holders' agreement, Sprint Nextel can 
block a change of control since that would require consent from 75% of the 
outstanding shareholders.

Still, Clearwire's board has a fiduciary duty to evaluate the DISH proposal 
since the offered equity price is at a premium to what was offered by Sprint 
Nextel to public Clearwire shareholders.

CreditWatch
Standard & Poor's will continue to monitor discussions between Sprint Nextel 
and Clearwire regarding the acquisition offer as well as the proposed offer by 
DISH for Clearwire. We could raise or affirm the ratings on Clearwire if an 
acquisition by either Sprint Nextel or DISH is ultimately completed.

It is our view that Sprint Nextel's acquisition of the portion of Clearwire 
that it does not already own would most likely be linked to consummation of 
SoftBank's pending purchase of Sprint Nextel. Accordingly, in the event that 
Sprint Nextel acquires full ownership of Clearwire, we will first assess the 
stand-alone credit profile of the combined company. Key factors will be the 
impact of the additional spectrum on Sprint Nextel's business risk profile as 
well as the higher leverage for the combined company. We believe that the 
stand-alone credit profile for a combined Sprint Nextel and Clearwire would be 
lower than Sprint Nextel's current stand-alone credit profile. Next, we would 
evaluate imputation of credit support from SoftBank depending on our view of 
the strategic relationship between SoftBank and Sprint Nextel. If, however, 
Sprint Nextel is not successful in its proposed acquisition of Clearwire, we 
would evaluate Sprint Nextel's stand-alone credit profile and impute some 
degree of support from SoftBank.

Related Criteria And Research
     -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012
     -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
     -- Use Of CreditWatch And Outlooks, Sept. 14, 2009
     -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
     -- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
     -- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008

Temporary contact number: Allyn Arden (917-882-2541)

Ratings List

Ratings Remain On CreditWatch; Recovery Ratings Unchanged

Sprint Nextel Corp.
Sprint Capital Corp.
Nextel Finance Co.
 Corporate Credit Rating                B+/Watch Pos/--    

Sprint Nextel Corp.
 Senior Unsecured                       BB-/Watch Pos      
   Recovery rating                      2                  
 Senior Unsecured                       B+/Watch Pos       
   Recovery rating                      3                  

Nextel Communications Inc.
 Senior Unsecured                       B+/Watch Pos       
   Recovery rating                      3                  

Nextel Systems Corp.
 Senior Secured                         BB/Watch Pos       
   Recovery rating                      1                  

Sprint Capital Corp.
 Senior Unsecured                       B+/Watch Pos       
   Recovery rating                      3                  

iPCS Inc.
 Senior Secured                         B+/Watch Pos       
   Recovery rating                      4

Our Standards:The Thomson Reuters Trust Principles.
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