The world of mega-mergers and acquisitions are rarely the subject of The Big Deal analysis but Softbank, Japan’s third-largest mobile-phone company’s, plans to make a “substantial” investment in US-based peer Sprint carries a corporate venturing twist.
Part of the potential deal reported by news agencies involves Softbank helping Sprint buy full control of Clearwire, a wholesale US wireless carrier that’s already 48% owned by Sprint.
Clearwire is a totemic deal for corporate venturing as it represents the largest investment by chip company Intel’s corporate venturing unit.
Intel Capital has invested in more than 1,000 companies and delivered excellent returns but its backing of Clearwire’s $600m round in 2006 has left it nursing a financial loss, according to the corporate venturing unit’s president Arvind Sodhani earlier this month.
In its regulatory filing in August, Intel’s remaining holdings of Clearwire were worth $31.8m down from $107.5m the year before after selling shares.
Intel Capital promoted Clearwire’s Wimax standard for wireless broadband to help promote Intel’s Centrino chip released in 2005 for laptops. But telecom carriers’ promotion of the rival Long Term Evolution (LTE) standard has seen Wimax eclipsed but left requiring heavy capital expenditure.
Softbank uses a similar standard in Japan so, if the deal happens and the press reports are accurate, then Sprint’s ownership of Clearwire could boost Wimax’s prospects and leave Intel Capital’s vision intact, even if the returns could go to another – the risk of venture investing.