UPDATE 2-U.S. FCC approves Sprint/Clearwire/SoftBank deal -sources

Wed Jul 3, 2013 7:18pm EDT

By Alina Selyukh

WASHINGTON, July 3 (Reuters) - U.S. regulators on Wednesday collected the final vote to approve the merger of Sprint Nextel Corp and SoftBank Corp, sources familiar with the situation said, clearing the last hurdle in the Japanese company's drawn-out battle to take control of the No. 3 U.S. wireless provider.

All three Federal Communications Commission members voted in favor of that merger as well as Sprint's related bid to buy out the shares of wireless company Clearwire Corp that it does not already own, said the sources who spoke anonymously because the approval has not yet been announced publicly.

In filings with the FCC, Sprint, Clearwire and SoftBank had said they hoped to close both deals on July 8 or 9.

SoftBank's $21.6 billion deal to buy 78 percent of Sprint would mark the largest-ever overseas acquisition by a Japanese company as hard-driving billionaire SoftBank founder Masayoshi Son seeks to expand beyond the mature Japanese cellphone market.

Sprint needs investment from SoftBank to help it pay for a network upgrade and step up competition with No. 1 and No. 2 rival providers AT&T Inc and Verizon Communications Inc. . The money would also help pay for the Clearwire buyout.

Clearwire, in which Sprint already owns a majority stake, is an important part of SoftBank's interest in Sprint because Clearwire holds a large amount of wireless airwaves, or spectrum, to help Sprint compete against its bigger rivals.

The FCC's review, running more than 70 pages long, focused on whether the two related deals were in the U.S. public interest and was the last regulatory hurdle for SoftBank after it received approvals from U.S. antitrust and national security regulators as well as Sprint shareholders.

FCC, Sprint and Clearwire spokesmen declined to comment. SoftBank could not be immediately reached for comment.

Clearwire minority shareholders are scheduled to vote on Sprint's buyout offer on July 8.

DELAY OVER SPECTRUM LANGUAGE

FCC Acting Chairwoman Mignon Clyburn and Commissioner Jessica Rosenworcel cast their approval votes last week. The required third and final vote from Commissioner Ajit Pai was delayed until Wednesday by adjustments to the wording used to address Sprint's ownership of airwaves, according to a source familiar with the negotiations.

Verizon and others had asked the FCC to use its deal review to weigh how it calculates Sprint's airwaves toward the so-called spectrum screen, which ensures fair allocation of spectrum licenses among competing providers.

Because of Sprint's majority ownership in Clearwire, the FCC had already attributed its spectrum to Sprint for screen purposes but viewed it as less valuable than the type owned by Verizon and AT&T and counted only a portion of Clearwire's entire spectrum ownership toward the screen.

Because the FCC is reviewing its approach to calculating spectrum and using the spectrum screen in a separate proceeding, Pai's office took time to negotiate a careful way to word their response to related concerns, according to the source.

Before the FCC's review and approval were public, AT&T shot back, decrying the agency not making adjustment to the spectrum screen.

"This refusal to acknowledge and account for all available BRS/EBS spectrum is neither rational nor defensible," Joan Marsh, AT&T's vice president of federal regulatory affairs, wrote in a blog emailed to reporters on Wednesday.

THE ERGEN HURDLE

Both deals involving Sprint for weeks faced an aggressive bidding war launched in April by Dish Network Corp's billionaire maverick founder Charlie Ergen, who bid both for Sprint against SoftBank and for Clearwire against Sprint.

Several minority Clearwire shareholders had launched a boisterous campaign seeking a higher bid from Sprint and siding with the satellite TV service provider.

Crest Financial, a large minority shareholder of Clearwire, which had pushed against Sprint and thrown wrenches into the FCC's review of the SoftBank deal, dropped its opposition on Wednesday.

Dish bowed out of the bidding for Clearwire last month after Sprint increased its offer to $5 a share, up from $2.97. Dish also dropped its battle to buy Sprint after SoftBank sweetened its offer.

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