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Clearwire Corporation (CLWRD) Message Board

  • bjspokanimal bjspokanimal Jan 22, 2013 3:38 PM Flag

    CLWR's "forgotten" value: Replacment Cost of it's Infrastructure

    A quick look at Clearwire's balance sheet reveals the depreciating, book value of it's "property, plant and equipment, the vast majority of which is it's network infrastructure.

    Seldom is it mentioned that the company spent close to $5 billion between 2007 and 2010 to build that infrastructure... assets which are currently carried on the books at about half that value.

    The fact that it would cost clearwire only $600 to $800 million to overlay it's network with LTE drove home an important point in all these "buyout" discussions. That point is that clearwire's network is an all-IP, all-digital, 2009/2010-vintage network that's practically already "network vision" quality. Simply put, whoever buys this company will save a ton of money when outfitting that network to transmit TD-LTE to clearwire's 133 million POPs, and that's worth a LOT to Mr. Son and Mr. Hesse as they try to screw clearwire's minority shareholders out of all that value.

    Further, clearwire built 90% of that infrastructure in 2009 and 2010... during the height of the "economic recession" when guys who string up cellular tower equipment for a living were working mighty cheap. A look at what sprint and AT&T are spending today on their tower upgrades drives home a pretty important point about the value of clearwire's infrastructure.....

    ..... and that is that spending the $5 billion that clearwire spent years ago today isn't going to enable a company to transmit TD-LTE to 133 million POPS. Not even CLOSE. But Mr. Son and Mr. Hesse would essentially get all that state-of-the-art for pennies on the dollar, by carving it out of the hides of the minority shareholders of sprint's favorite, red-headed whipping boy... Clearwire.

    Spokanimal

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    • Good topic. The migration path for CLWR network is straightforward to LTE, but we cannot forget the whole core network needs to be replaced and it is not " just a line card in the BBU" as mis represented on this board previously. What will really add a layer of complexity(and cost)to a future CLWR network is a convergent LTE-A capable low, mid and high band eNodeB.

      I view CLWR more like a REIT anyway, but the existing infrastructure value has almost been forgotten here.

      Sentiment: Hold

      • 2 Replies to telcostuff
      • Let's not also forget the relative cost and role the macrocell RAN takes in the overall network and services offering: the macro base stations are expensive, sometimes difficult to obtain, and require ongoing leases, backhaul costs, etc. Despite the complexity, time for development that makes a fairly new installed network 'strategically valuable', if it is so needed in a timely fashion, the cost of the new 'True 4G' networks that are multiple-media by their design and will be so due to the level of competition that will be staged around them, and because the new networks all will use small cells to from a minor to a major degree, it is such that it puts the Clearwire network as just the basic shell, not a complete competitive offering. The statement downplays the role of what CW has installed - I stated it that way because that is a reasonable way for a regulator, judge, jury, etc. to come away with because it is based in fact. The basic, macro-cell only type network is not all it takes to be competitive in the world today.

      • There is much more involved than the basic base stations as you pointed out. The value to network operators depends on what they deploy. That should be coordinated between Sprint and Clearwire, however, that may now change to emphasize different vendors, causing some equipment to become obsolete, not because it is out of date, but simply because it makes sense to standardize on a different set of hardware, support/network software, etc. We can guess that since Clearwire's network is a basic architecture and uses IP back-haul, ATCA, etc. that most of it can be used. However, that may not be the position that Sprint-SB would take. DISH also may make different choices - although it looks like they would use Clearwire in network deployment and management so probably not. It also helps that both Clearwire and Sprint have come to use Ericsson as an overriding supplier/netops. Softbank also makes extensive use of E (see SOFTBANK MOBILE signs LTE contract with Ericsson in Japan) and they have other suppliers in common. This should make for a pretty tight overall road map. However, 'go tell that to the judge'... it becomes an issue that has to be argued which appears to be time constrained... the only lawsuit appears to be that of Crest and the motion for fact-track hearing on the case was denied until after the SB and, therefore, Clearwire acquisitions are expected to be cleared. Things always do not always go according to expectations so the issue remains available for debate. However, this becomes a matter for adversarial positions to be staked out.. Sprints side saying there is less to be gained and much more investment to be undertaken and other issues that make the point less relevant, while DISH, Crest, Kellett are forced to argue from outside of the direct situation, based on speculative plans for deployments and use of the network. All of this type of argument carry a lower weight than what is here and now; the facts of CLWR facing debt obligations while being dependent on Sprint.

        There are many arguments for there being a higher value placed on the stock. I can think of good reasons why it can be argued that the acquisition of CW is opportunistic to the point of exploiting the good faith of common stock investors... but fairly none that prevent it from happening. If I had thought otherwise, I would have not said months ago that a take out value for CLWR was $4.0-$4.50 and not $7 or more that might be justified by analysis that is within the bounds of reality. As mentioned previously, it now looks like that $4.50 peg was generous. Sprint might just offer to meet or slightly beat DISH's offer for choice cuts out of Clearwire (of course, while leaving them upside opportunities left to potentially exploit) in order to gain favor with enough investors to throw in the towel to clinch it... $3.50 anyone?

    • Sprint won't use any of CLWR's infrastructure - it is nothing like Network Vision.

      Geesh, the #$%$ that gets posted on the internet.

    • CLWR's plant is pretty much worthless in a Network Vision world. Not to mention it is pretty much worthless to every other carrier, too. Nobody wants WiMax at 2.5 in the US.

      Call Sanford & Son to pick the junk up.

      It's all about the spectrum.

 

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