In one of the most-confusing “ownership” stories in recent memory, though Sprint now owns what might under other circumstances be a controlling interest in Clearwire, both Sprint and Clearwire say that is not the case. That seems true, “de jure.” In a convoluted and odd deal, Sprint, though once a clear majority shareholder, never had management control of Clearwire. Now it appears, even as Sprint first divested shares to clarify that it did not have control, now is acquiring shares, while still insisting it does not have management control.
That is true, it appears. It also is true that most experienced observers do not consider the statement “true” in a fundamental sense. As one cannot “prove” one lives someone, though it is “true,” the converse might also sometimes be “true.” Sprint appears not to have managment control, by design. But does Sprint really not control Clearwire in every sense that matters, in terms of Clearwire’s ultimate future?
It is hard to say. One can imagine a hostile takeover of Clearwire that would aim to succeed by buying only about 49 percent of the open market shares not owned by Sprint, and then acquire management control, even with a minority stake. But what would that really mean? Sprint would still own a majority of shares. The minority owner would have management control, but not majority ownership. It is confusing in the extreme.
Clearwire CEO Erik Prusch addressed that issue on Clearwire’s latest earnings report. “I want to be crystal clear, Sprint has not gained any additional governance rights or board seats through their agreement to purchase Eagle River shares,” said Prusch.
“The strategic investor group board seats and governance rights do not transfer when shares are sold,” said Prusch. That means Sprint does not gain additional board seats whenever it buys investment stakes held by other Clearwire investors, says Prusch.
It appears that some of the confusion grows from earlier decisions by Sprint and Clearwire whereby Sprint agreed not to have management control of Clearwire. Also, Sprint has in the past declined to take steps to control Clearwire or buy the company outright.
Still, many believe, despite the logic of the latest Clearwire statement and its factuality, in a de jure sense, that the de facto reality could be different.