The offer from Dish is more than $5 billion higher than the Softbank offer, including about $0.73 more per Sprint share in cash. Sprint shareholders will also get a bigger stake in the resulting company than they will get in the Softbank deal. No contest there.

Why is Sprint worth $5 billion more to Dish than it is to Softbank? The answer is reasonably simple: spectrum. Sprint holds the key to 133 MHz of wireless spectrum owned by Clearwire Corp. (NASDAQ: CLWR). Combined with Sprint’s own spectrum holdings the company holds the rights to 184 MHz of wireless spectrum, more than AT&T Inc. (NYSE: T) — 77 MHz — and Verizon Communications Inc. (NYSE: VZ) — 83 MHz — combined.

Dish has been searching for and investing in terrestrial spectrum for some time now as it tries to expand beyond its satellite pay-TV roots. Dish has already offered to buy about a quarter of Clearwire’s spectrum for $2.2 billion, but the company said it will pull its offer if Sprint takes today’s deal.

Softbank appreciates the value of that wireless spectrum as well, and the company already uses a WiMax technology similar to Clearwire’s for its own wireless network in Japan.

For U.S. customers, which is the better deal? Under Softbank, Sprint is more likely to remain in no better than third place among U.S. wireless carriers. If the proposed acquisition of MetroPCS Communications Inc. (NYSE: PCS) by T-Mobile USA is completed, Sprint will like drop to fourth place as measured by subscriber counts. That will make it more expensive for Sprint to operate and it will have to market its services aggressively to gain new subscribers. That will likely mean lower prices and that would be good for wireless customers.

The Dish offer is based on a desire by Dish and its chairman, Charlie Ergen, to offer a bundled package of home and mobile video, voice service, and broadband service. That would make Dish more competitive with both AT&T and Verizon, which might also enhance competition and lower prices for wireless customers. With three competing services at this scale, prices may be held in check as the two big guys are forced to counter Dish’s offering with one of their own.

Dish has made a better offer from a shareholder’s point of view and, potentially at least, from a customer’s point of view. Softbank, with a market cap of around $47 billion (nearly three times that of Dish), has deep pockets but at some point there is a bottom to those pockets.

Softbank has not articulated anything like the vision that Dish and Ergen have for Sprint. Under Softbank, Sprint is likely to remain just another also-ran in the wireless wars. Dish offers the promise of something a lot bigger.

Today the first formal objection to the bid was lodged by Mount Kellet Capital Management, which said that Clearwire’s wireless spectrum ownership and other assets were worth up to $6.30 a share. MarketWatch cites Mount Kellet’s letter:

To sell the company to Sprint at a $2.90 per share valuation would be an absolute outrage and, in our view, a clear breach of the board’s fiduciary duties to the public stockholder. Clearwire has enormous long-term value, and we will oppose any transaction that prevents the public stockholders from having their fair share of that upside.

Mount Kellet owns approximately 3.6% of Clearwire’s outstanding shares, and the firm could have a point. Clearwire owns licenses to 133 MHz of wireless spectrum, which combined with Sprint’s 53 MHz, give the potentially combined company more than double the spectrum holdings of either Verizon Communications Inc. (NYSE: VZ) or AT&T Inc. (NYSE: T), and more than four times the spectrum holdings of T-Mobile USA.

In a recently completed spectrum acquisition, Verizon paid $3.9 billion for 122 spectrum licenses, or about $0.69 per MHz POP, which is defined as the product derived from
multiplying the number of megahertz associated with a license by the population of the
license’s service area. Sprint’s offer for Clearwire comes in around $0.25 per MHz POP, which Mount Kellet thinks well below its $0.38 per MHz POP value. If the investment firm is right, that adds up to a total value for Clearwire of $6 to $9 billion.

Clearwire also has about $4 billion in debt, which Sprint would assume, bringing its offer to the low end of Mount Kellet’s stated range. The other thing that argues for a lower price is that not all spectrum is created equal, and, for a variety of technical reasons, Clearwire’s spectrum is worth less than the lower frequency bands owned by Verizon and AT&T.

Softbank, which is acquiring majority control of Sprint has also reportedly put a cap of $2.97 a share on what Sprint can pay for Clearwire. That’s the price Craig McCaw received for a block of stock he sold to Sprint. That doesn’t give Sprint much room to maneuver.

Clearwire’s shares are down about 0.8% today at $3.14 in a 52-week range of $0.83 to $3.18. Company shareholders who want more should keep that 52-week low in mind.

Paul Ausick

Let’s review. Clearwire’s shares soared 75% in mid-October when Softbank made its $20.1 billion offer for Sprint. A couple of days after the offer was announce, Sprint acquired another 34 million shares of Clearwire, enough to give Sprint and eventually Softbank control of the wireless carrier. Clearwire shares jumped another 25%, to a 52-week high near $3.00 a share.

Since then Clearwire shares have fallen to a low below $2.00 a share before coming back to near the 52-week high. Clearwire’s value to Sprint lies in its wireless spectrum holdings in the U.S. For Softbank, Clearwire’s WiMax technology is the same as the technology Softbank is using to build a wireless network in Japan.

But with control of Clearwire already established, why bother to buy the nearly 500 million shares that Sprint doesn’t already own? At $3 a share that’s another $1.5 billion, and Clearwire’s shareholders are sure to want some premium. Would you make that deal?

Clearwire’s shares are up 14% at $2.73 in a 52-week range of $0.83 to $2.96. The shares reached a high of $2.76 earlier today.

Paul Ausick

The company’s CEO noted:

Recent developments in the U.S. wireless industry serve as a direct reminder of the key strategic role deep spectrum resources and a global LTE ecosystem will play in the long-term success of any 4G mobile broadband operator. Clearwire’s unmatched spectrum assets and focus on serving major population centers will be the foundation on which we will build a critical 4G LTE network positioned to serve the needs of the industry and the rapidly growing base of 4G customers across the country.

Those “recent developments,” of course, are the acquisition by Japan’s SoftBank of a majority stake in Sprint Nextel Corp. (NYSE: S) and the acquisition by Sprint of just enough Clearwire stock to give Sprint a majority ownership stake in the wireless carrier.

Clearwire guided full-year revenue to $1.2 to $1.3 billion and an adjusted EBITDA loss of $150 to $200 million, which is slightly better than the previous guidance calling for a loss of $175 to $225 million. Consensus estimates call for full-year revenue of $1.28 billion and an EPS loss of $1.18.

One bit of good news for the company was that its costs per subscriber additions fell from $288 per subscriber in the same quarter last year, to $191 this year. Sequentially costs per gross addition fell from $226 in the second quarter. Clearwire attributed that to its no-contract offering, which also drove the company’s churn rate to 5.1% in the third quarter, up 4.2% sequentially.

Clearwire’s shares are down about 0.6% in after-hours trading, at $1.79, in a 52-week range of $0.83 to $2.96. The consensus target price for the shares was around $2.65 before today’s report.

Paul Ausick

Now we have Clearwire in the gutter on a report out of Bloomberg saying that Sprint has no immediate plans to acquire Clearwire. The investment by Softbank likely will not get final regulatory approvals until next year, and this likely locks up the companies from doing much structural change between now and then.

When we were analyzing the options trading, the prices at the end of last week were looking like an implied $2.30 or $2.35. Yesterday shares briefly were above $2.90 as the speculators drove shares way too high.

Another concern we had over any such merger was that the cadre of analysts that covers Clearwire had only a $2.20 consensus price target, according to Thomson Reuters. The range of price targets was $1.00 to $4,00 as well.

We cannot help but to go back to the formal disclosure made and scratch our heads over why investors were so caught up over a potential deal yesterday. Sprint’s release stated clearly, “The transaction does not require Sprint to take any actions involving Clearwire Corporation other than those set forth in agreements Sprint has previously entered into with Clearwire and certain of its shareholders.”

Clearwire shares are tanking in the premarket. Shares closed at $2.69 on Monday and the shares are down 19% at $2.17 in the early trading. Be advised that Clearwire has traded over 100 million shares a day for each of the past three trading sessions. The only other recent time we have seen 100 million shares trade was last December 8.

JON C. OGG

American Tower Corporation (NYSE: AMT) hit a 52-week high of $75.68 on the day. That actually appears to be an all-time high. Crown Castle International Corp. (NYSE: CCI) is up 3.6% at $67.00 amd the high today of $67.21 compares to its prior high of $67.61. That is effectively an all-time high as well. Even the number-three player of SBA Communications Corp. (NASDAQ: SBAC) is up 1.5% at $66.23 and it hit a 52-week high of $66.71 on the day. That looks like an all-time high as well.

The cell towers effectively do not care which cellular provider or providers are bringing the business. All that matters is that there is stronger business from companies that can pay their bills. And as long as the smartphone users keep using more and more data then they win.

Neither Sprint nor Clearwire are anywhere at all close to their all-time highs. The tower operators are at all-time highs. It seems more than fair to ask who is the real winner of a better capitalized Sprint. All-time highs in share prices generally speak for themselves.

JON C. OGG

It was last week when it became confirmed by CNBC’s David Faber that Clearwire’s stock shot drastically higher. At the time the stock had risen slightly above $2.00, and we showed that options traders were prepared for Clearwire to rise as high as $2.30 or $2.35. Well, even though we predicated that anything is possible the reality is that the price of poker has gone up handily. Shares are around $2.67 after a 15% gain today and shares briefly hit a new 52-wee high today. The prior high was $2.64 and the new high is $2.96.

We would make a reminder here that Sprint made sure to say in its release that it was not under any obligation to increase its commitment to Clearwire. It’s SEC filing specifically said, “The transaction does not require Sprint to take any actions involving Clearwire Corporation other than those set forth in agreements Sprint has previously entered into with Clearwire and certain of its shareholders.”

If you go back to options, the options traders are now putting what would appear to be a higher-end value of $3.30 to $3.40 if you are willing to go out to the November and December options expirations. There is one thing to remember here: options trading is simply one of many tools to try to allocate a future value to a scenario. Call options and put options frequently either overestimate or underestimate a value.  That is what makes a market, and in a zero-sum game there is a winner and a loser.

For whatever this is worth, Clearwire’s fundamental standalone consensus per share valuation is $2.21 according to the consensus estimates from Thomson Reuters. We would also warn that the ten analysts have a price target of $1.00 to $4.00 on Clearwire. And for the record, analyst targets also often do not matter when it comes to a buyout situation or other situation.

JON C. OGG

Today’s comments from David Faber have rekindled interest, although the news is the same and we wonder how much higher Sprint can let this get before it announces a takeover. The might even be what is called a “takeunder” because Clearwire shares were trading down at $1.30 before the Sprint-Clearwire-Softbank news broke.

Clearwire is now up 10% at $2.45 and the consensus standalone value of Clearwire is only $2.20, according to Thomson Reuters consensus data. We already have seen a whopping 22 million shares trade hands, and that is after a massive 170 million shares traded hands on Thursday.

It is still too early in the trading day to give a clear projection of what options traders are valuing a Clearwire acquisition at yet. Stay tuned.

We worry about the consensus price target being under the trading price, although analysts may have a much higher implied buyout valuation versus a standalone operating valuation. As a reminder, the biggest issue is the $4+ billion in debt that Clearwire has. As a reminder, there is no assured limit as to what a buyer would pay, and a buyer may value this spectrum acquisition far higher than what analysts and options traders value the company.

JON C. OGG

Clearwire has lost several investors over the past several months, including Intel Corp. (NASDAQ: INTC) and Google Inc. (NASDAQ: GOOG). According to The Wall Street Journal, Intel wrote down the full value of its 7.3% voting stake in Clearwire and Google took a loss of about $17 million on its original $500 million stake in the company.

Clearwire’s fourth-generation wireless network technology, called WiMax, did not take the market by storm. The company could not get the network built out quickly enough to stem the tide of 4G LTE networks. Clearwire is now converting its network to LTE, but the work is costly and takes time that the company does not have.

Based on yesterday’s closing stock price, Time Warner’s 46.4 million shares are worth about $73 million. The company originally paid $550 million for the shares. One analyst said the company already had written down its investment in Clearwire and would use proceeds from the sale to buy back shares.

Clearwire closed at $1.54 last night and shares lost another 2.6% in after-hours trading, to $1.50. The stock’s 52-week range is $0.83 to $2.66.

The full filing is available here.

Paul Ausick

Hesse also defended his company’s decision to go with WiMax rather than 4G LTE technology for its high-speed networking. AllThingsD reports:

Hesse said that the company had only two choices — be first with WiMax or last among the majors with LTE. That’s because Sprint didn’t have enough free spectrum to launch LTE when Verizon did.

Hesse declined to comment on whether or not Sprint would add the iPad to its offerings.