Exhibit(c)(4)
Clearwire
Board of Directors Presentation December 12, 2012
Evercore Partners
These materials have been prepared by Evercore Group L.L.C. (“Evercore”) for the Board of Directors of Clearwire Corporation (the “Company”) to whom such materials are directly addressed and delivered and may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with Evercore. These materials are based on information provided by or on behalf of the Company and/or other potential transaction participants, from public sources or otherwise reviewed by Evercore. Evercore assumes no responsibility for independent investigation or verification of such information and has relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and forecasts of future financial performance prepared by or reviewed with the management of the Company and/or other potential transaction participants or obtained from public sources, Evercore has assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such management (or, with respect to estimates and forecasts obtained from public sources, represent reasonable estimates). Evercore has not made nor assumed any responsibility for making any independent valuation or appraisal of the assets or liabilities of the Company, nor has Evercore been furnished with any such appraisals. No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present or the future. These materials were designed for use by specific persons familiar with the business and affairs of the Company. These materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. These materials have been developed by and are proprietary to Evercore and were prepared exclusively for the benefit and internal use of the Board of Directors of the Company.
These materials were compiled on a confidential basis for use by the Board of Directors of the Company in evaluating the potential transaction described herein and not with a view to public disclosure or filing thereof under state or federal securities laws, and may not be reproduced, disseminated, quoted or referred to, in whole or in part, without the prior written consent of Evercore.
These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Evercore (or any affiliate) to provide or arrange any financing for any transaction or to purchase any security in connection therewith. Evercore assumes no obligation to update or otherwise revise these materials. These materials may not reflect information known to other professionals in other business areas of Evercore and its affiliates.
Evercore and its affiliates do not provide legal, accounting or tax advice. Accordingly, any statements contained herein as to tax matters were neither written nor intended by Evercore or its affiliates to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on such taxpayer. Each person should seek legal, accounting and tax advice based on his, her or its particular circumstances from independent advisors regarding the impact of the transactions or matters described herein.
Evercore Partners
Table of Contents
Preliminary Draft - Confidential
Section
Transaction Overview I
Valuation Analysis II
Appendix
Evercore Partners
I. Transaction Overview
Evercore Partners
Transaction Overview
Preliminary Draft - Confidential
Summary of Select Terms of the Proposed Transaction
Scope of Assignment
Evercore Group L.L.C. (“Evercore”) has been asked by the Board of Directors of Clearwire Corporation (“Clearwire”, “CLWR” or the “Company”) whether, in Evercore’s opinion as of the date hereof, the consideration of $[x] to be received by Clearwire Class A shareholders from Sprint Nextel Corporation (“Sprint”) is fair, from a financial point of view, to all non-Sprint shareholders of the Clearwire Class A common stock (the “Transaction”)
Valuation
Purchase Price per share: $[ ]
Consideration:
Consideration: 100% cash
Each Class A Common Share / Each Class B Share and Unit, together: Same consideration
- 100% of non-Sprint shares, including public shareholders (37.8% of fully-diluted shares) and Equityholders (Comcast/ Bright House/ Intel, owners of 12.8% of fully-diluted shares), which represents 50.6% of total fully-diluted ownership
Transaction Structure:
Reverse subsidiary merger, whereby Sprint acquisition subsidiary is to merge into Clearwire Corporation
Clearwire will be the surviving entity
Conditions Precedent to Close:
Approval by a required vote of Clearwire shareholders
Closing of Sprint and SoftBank transaction
Required legal and regulatory approvals
No MAE at Clearwire
Holders of not more than 12.5% of equity seeking dissenter rights of appraisal under Delaware law
Note: Terms to be updated for final deal
Evercore Partners
1
Transaction Overview
Preliminary Draft - Confidential
Summary of Select Terms of the Proposed Transaction (Cont’d)
Interim Financing:
Sprint will provide up to $800mm of financing
- 10 monthly installments of $80mm
- [Limited to 7 installments if Clearwire and Sprint cannot agree to an extended build out plan in 45 days post execution of merger agreement]
Instrument will be 1% unsecured Exchangeable Notes, with conversion price of $1.50 and maturing in June 2018 (5 years)
- Shareholder vote is required when Nasdaq 20% limit is reached or Clearwire runs out of authorized shares
If Deal Terminates:
Due to failure of Clearwire shareholder vote:
- Equityholders will offer Sprint the right to buy their Class A/ Class B shares at the Purchase Price
- Exchangeable Notes conversion price of $1.50/share; conversion at option of Sprint
If merger fails for [any reason except for a failure of Clearwire shareholder vote]:
- Sprint will forgive $120mm of Exchangeable Notes and the balance will be mandatorily converted at the time of termination into common shares at $1.50/share; and
- [Sprint will pay Clearwire an additional $100mm prepayment for future LTE services on 1/1/14 if Clearwire has met its build-out requirement of 5,000 sites by the date of termination of the agreement]
Note: Terms to be updated for final deal
Evercore Partners
2
Transaction Overview
Preliminary Draft - Confidential
Analysis of Sprint Proposal
($ in millions)
Acquisition Consideration:
Latest Sprint Proposal (12/9/12)
Clearwire Counterproposal (12/3/12)
Indicative Consideration Per Share
$2.90 $3.15
Equity Transaction Value (non-Sprint shares) (1)
$2,192 $2,381
Premiums Paid:
Pre-SoftBank(2)
11/20/12 (3)
Pre-SoftBank
11/20/12
Pre-SoftBank
11/20/12
Spot
$1.30 $2.12 123.1% 36.8% 142.3% 48.6%
1-Week Prior
$1.34 $2.22 116.4% 30.6% 135.1% 41.9%
4-Weeks Prior
$1.63 $1.91 77.9% 51.8% 93.3% 64.9%
30-Day VWAP
$1.47 $2.17 97.1% 33.9% 114.0% 45.4%
90-Day VWAP
$1.38 $1.89 109.7% 53.5% 127.8% 66.7%
180-Day VWAP
$1.65 $1.75 76.1% 65.4% 91.2% 79.6%
52-Week High
$2.50 $2.69 16.0% 7.8% 26.0% 17.1%
52-Week Low
$0.90 $0.90 222.2% 222.2% 250.0% 250.0%
Sprint Current Basic Ownership (4)
50.4% 50.4%
Sprint Pro Forma Ownership
100.0% 100.0%
Implied $/MHz-POP (5)
$0.21
$0.22
Source: Management Projections, FactSet, Bloomberg
Note: 30/90/180 Day VWAP premiums are based on trading days; 1-Week and 4-Week Prior are based on 5 and 20 trading days, respectively
(1) Non-Sprint shares include both Class A and Class B shares. Fully-diluted shares include ~1,466mm basic shares and ~29mm RSUs. Sprint shares (incl. Eagle River): ~739mm
(2) Represents 1 day before SoftBank/Sprint acquisition rumor (10/10/12)
(3) Represents 1 day before initial Sprint proposal
(4) PF for Eagle River; Fully Diluted Sprint Ownership is: 49.4%
(5) Assumes 12/31/12 debt balance of $4,486mm, 12/31/12 cash balance of $828mm, NPV of Spectrum Leases of $1,800mm and 47.0bn MHz-POPs
Evercore Partners
3
Transaction Overview
Preliminary Draft - Confidential
Summary Terms of the Exchangeable and Pro Forma Impact
($ in millions)
Summary Terms
Issuer
Clearwire
Type
Exchangeable Notes, exchangeable into Clearwire shares
Size
$800mm subject to terms and conditions
Coupon
1.00%
Conversion Price
$1.50
Maturity
5 Years
Callable
Non-call Life
If deal terminates due to Clearwire shareholder vote failure: at option of Sprint
Conversion
If deal terminates due to any other reason: Sprint will forgive $120mm of principal and the balance will be convertible mandatorily into equity at termination
Ranking
Unsecured, pari passu to existing Exchangeable Notes
Fundamental Change
Sprint can put the converts adjusted for Make Whole if Clearwire is acquired by another buyer
PF Dilution from Exchangeable
Status Quo
Sprint Shares 739
Basic Shares 1,466
Fully-Diluted Shares Outstanding 1,495
Sprint Basic Ownership 50.4%
Sprint FD Ownership 49.4%
Pro Forma for Exchangeables
(Assumes Transaction Does Not Close)
Full 10 Month Drawdown
7 Month Drawdown
Size
$800 $680(2)
$560
$440(2)
Conversion Price
$1.50 $1.50 $1.50 $1.50
Incremental Shares to Sprint
533 453 373 293
Memo: Implied Conversion Price
$1.76 $1.91
PF Sprint Shares
1,272 1,192 1,112 1,032
PF FDSO
2,028 1,948 1,868 1,788
PF FD Sprint Ownership
62.7% 61.2% 59.6% 57.7%
SIG Shares (1)
191 191 191 191
Sprint Shares (Post purchase of SIG shares)
1,463 1,383 1,303 1,223
PF FD Sprint Ownership (Incl. SIG shares)
72.2% 71.0% 69.8% 68.4%
Note: Terms to be updated for final deal
(1) Includes Comcast, Bright House and Intel
(2) Amounts reflect $120mm of debt forgiveness in the event deal terminates due to a reason other than Clearwire shareholder vote failure
Evercore Partners
4
Transaction Overview
Preliminary Draft - Confidential
Evercore Analysis Overview
In connection with rendering our opinion, we have, among other things:
i. reviewed certain publicly available business and financial information relating to the Company that we deemed to be relevant, including publicly available research analysts’ estimates;
ii. reviewed certain non-public historical financial statements and other non-public historical financial and operating data relating to the Company prepared and furnished to us by management of the Company;
iii. reviewed certain non-public projected financial data relating to the Company prepared and furnished to us by management of the Company (the “Management Projections”);
iv. discussed with management of the Company, the Company’s past and current operations, financial projections and current financial condition, including the Company’s liquidity position and capital needs (and including management’s views on the risks and uncertainties related to the foregoing);
v. reviewed the reported prices and the historical trading activity of the shares of Class A Common Stock;
vi. compared the financial performance of the Company and the valuation multiples relating to the Merger with those of certain other transactions that we deemed relevant;
vii. reviewed a draft of the Agreement dated December [--], 2012, which we have assumed is in substantially final form and from which we assume the final form will not vary in any material respect to our analysis;
viii. reviewed drafts of the Note Purchase Agreement and the indenture relating to the Notes, each dated December [X] , 2012, which we have assumed are in substantially final form and from which we assume the final form will not vary in any material respect to our analysis; and
ix. performed such other analyses and examinations and considered such other factors that we deemed appropriate.
Evercore Partners
5
Transaction Overview
Preliminary Draft - Confidential
Evercore Analysis Overview (Cont’d)
For purposes of our analysis and opinion, we have assumed and relied upon, without undertaking any independent verification of, the accuracy and completeness of all of the information publicly available, and all of the information supplied or otherwise made available to, discussed with, or reviewed by us, and we assume no liability therefor.
We have assumed that the Management Projections have been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of the Company as to the future financial performance of the Company under the business assumptions reflected therein. We have not made nor assumed any responsibility for making any independent valuation or appraisal of the assets or liabilities of the Company, nor have we been furnished with any such appraisals.
We have also assumed that there have been no material changes in the Company’s assets, financial condition, results of operations, business or prospects since the date of its last financial statement made available to us. We express no view as to any projected financial data relating to the Company or the assumptions on which they are based.
We were not authorized to solicit, and did not solicit, interest from any third party with respect to the acquisition of any or all of the shares of Company Common Stock or any business combination or other extraordinary transaction involving the Company.
The full text of our opinion provided with this presentation sets forth assumptions made, matters considered and limitations on the review undertaken in conjunction with the opinion. You are urged to read the opinion carefully and in its entirety.
Evercore Partners
6
Transaction Overview
Preliminary Draft - Confidential
Potential $2.5bn Spectrum Sale - Net Proceeds and Uses
($ in millions)
Potential Spectrum Sale
$/MHz-POP
$0.216
Total MHZ-POPs
11,367
Total Gross Spectrum Value
$2,460
Total Gross Spectrum Value
$2,460
Less: NPV of Leases
(177)
Less: Est. Tax Leakage
(200)
Net Proceeds
$2,083
Use of Spectrum Sale Proceeds
Sources
Net Proceeds from Spectrum Sale
$2,083
Total Sources
$2,083
Uses
SCC
MCC
Capex Accounts (Q4 2013 - 2014)
$365
$337
General Proceeds (25%)
429
436
Excess Proceeds / Debt Tendered at Par (75%)
1,288
1,309
Total Uses
$2,083
$2,083
Any spectrum sale proceeds would have to be used as per existing debt covenants:
– Proceeds can be set aside for ~1 year capex
– 25% of proceeds net of capex can be used for opex (i.e. “General Proceeds” )
– Remaining 75% needs to utilized to tender for 1st lien debt at par; proceeds must be used for opex/capex if debt not tendered
Source: Management Projections, Dish preliminary indicative “Thoughts” document
Note: Analysis presented is based upon a theoretical transaction with Dish and is based upon the summary of terms mentioned in Dish’s “Thoughts” document
Note: SCC assumes Sprint is Clearwire’s primary Wholesale customer; MCC assumes other large Wholesale customers in addition to Sprint
Evercore Partners
7
Transaction Overview
Preliminary Draft - Confidential
Illustrative Implied Equity Value Post-Potential Spectrum Sale
($ in millions)
Assumes hypothetical $2.5bn spectrum sale resulting in $2.1bn net proceeds (1)
Value of Remaining Spectrum
$/MHz-POP
$0.22 (5)
SQ MHz-POPs
47,000
Less: MHz-POPs Sold to Dish
(11,367)
PF MHz-POPs
35,633
Implied TEV
$7,711
Less: NPV of Spectrum Leases
(1,623)
Less: Debt (12/31/12)
(4,486)
Plus: Cash (12/31/12) (2)
2,911
Implied Equity Value
$4,514
# of FD Shares (mm) (3)
1,495
Implied Share Price at 12/31/12
$3.02
Implied Share Price at 9/30/13 (4)
$2.54
Source: Management Projections
(1) Based on 11.37bn MHz-POPs per Dish preliminary indicative “Thoughts” document
(2) Pro forma net proceeds of ~$2.1bn from potential spectrum sale
(3) Includes basic shares of ~1,466mm and RSUs of ~29mm
(4) 9/30/13 SCC debt balance of $4,471mm and cash balance of $2,175mm (pro forma for $2,083 of net proceeds from potential spectrum sale)
(5) Based on spectrum value provided in Dish preliminary indicative “Thoughts” document
Evercore Partners
8
II. Valuation Analysis
Evercore Partners
Valuation Analysis
Preliminary Draft - Confidential
Financial Summary
($ in millions)
SCC (1)
2013 2014 2015 2016 2017 2018 2019 2020
Revenue
$1,191 $839 $1,211 $1,714 $2,101 $2,434 $2,749 $2,904
% YoY Growth
(5.6%) (29.5%) 44.3% 41.6% 22.5% 15.9% 12.9% 5.7%
Memo: LTE Devices with Usage (000s)
540 2,910 5,282 7,376 9,371 9,909 10,836 11,392
Adj. EBITDA
($267) ($717) ($387) $106 $745 $1,287 $1,554 $1,640
% Margin
NM NM NM 6.2% 35.5% 52.9% 56.5% 56.5%
Capex
$293 $317 $154 $171 $238 $243 $279 $298
% Revenue
24.6% 37.8% 12.7% 10.0% 11.3% 10.0% 10.1% 10.3%
Levered FCF
($1,130) ($1,581) ($1,298) ($665) ($87) $451 $687 $773
Cumulative Levered FCF
($1,130) ($2,711) ($4,009) ($4,674) ($4,761) ($4,310) ($3,623) ($2,849)
Cash Shortfall (2)
($301) ($1,882) ($3,181) ($3,845) ($3,932) ($3,481) ($2,794) ($2,021)
MCC (1)
2013 2014 2015 2016 2017 2018 2019 2020
Revenue
$1,207 $1,082 $2,351 $3,905 $5,098 $6,145 $7,141 $7,447
% YoY Growth
(4.4%) (10.3%) 117.2% 66.1% 30.6% 20.5% 16.2% 4.3%
Memo: LTE Devices with Usage (000s)
540 8,790 19,411 27,677 33,577 36,571 38,742 39,986
Adj. EBITDA
($280) ($482) $748 $2,275 $3,696 $4,871 $5,763 $5,940
% Margin
NM NM 31.8% 58.3% 72.5% 79.3% 80.7% 79.8% Capex $327 $294 $235 $390 $510 $614 $714 $745
% Revenue
27.1% 27.2% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Levered FCF
($1,178) ($1,305) ($420) $1,176 $2,494 $2,148 $2,563 $2,730
Cumulative Levered FCF
($1,178) ($2,483) ($2,903) ($1,727) $767 $2,915 $5,478 $8,207
Cash Shortfall (2)
($350) ($1,654) ($2,075) ($898) $1,596 $3,743 $6,306 $9,036
Source: Management Projections
(1) SCC assumes Sprint is Clearwire’s primary Wholesale customer; MCC assumes other large Wholesale customers in addition to Sprint
(2) Cumulative Levered FCF adjusted for estimated end of 2012 cash balance of $828mm; assumes debt is refinanced at maturity at existing rates; assumes no incremental debt
Evercore Partners
9
Valuation Analysis
Preliminary Draft - Confidential
Share Price Performance
2 Year Share Price Performance
$8.00
$6.00
$4.00
$2.00
$0.00
(12/9/10): Bond offering - $1,375mm
(4/19/11): Sprint/LightSquared partnership rumors
(12/13/11): Capital Raise - $734mm at $2.00 per share
(10/11/12): SoftBank/Sprint rumor
(10/15/12): SoftBank deal announced
(1/27/12): $300mm offering of Senior Secured Notes
(10/3/12): T-Mobile/MetroPCS announcement
(10/18/12): Sprint / Eagle River announcement
(8/3/11): Sprint CFO speculates on Clearwire bankruptcy
$2.39
(10/7/11): Sprint Investor Day
12/7/10
5/2/11
9/25/11
2/18/12
7/13/12
12/7/12
Share Price Performance Prior to Sprint / SoftBank Deal
Clearwire Stock Performance
10/10/2012 (1)
11/20/2012 (2)
Price
$1.30 $2.12
1-Week Prior
1.34 2.22
4-Weeks Prior
1.63 1.91
30 Day VWAP
1.47 2.17
90 Day VWAP
1.38 1.89
180 Day VWAP
1.65 1.75
52-Week High
2.50 2.69
52-Week Low
0.90 0.90
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
(10/18/12): Sprint / Eagle River announcement
Current: Clearwire up ~84% since before rumor
$2.39
(10/3/12): T-Mobile/MetroPCS announcement
(10/11/12): SoftBank/Sprint rumor (Clearwire up 70.8%)
(10/15/12): SoftBank deal announced (Clearwire up 15.9%)
8/31/12
9/19/12
10/9/12
10/28/12
11/17/12
12/7/12
Source: Factset, Company Filings
(1) Represents 1 day before Sprint/SoftBank acquisition rumor
(2) Represents 1 day before initial Sprint proposal
Evercore Partners
10
Valuation Analysis
Preliminary Draft - Confidential
($ in millions)
Methodology
Implied Share Price
Selected Range
Low High
For Reference Purposes Only
52 Week Low / 52 Week High Share Price
Analyst Share Price Targets (1)
Public Peer Group Analysis
Public Peer Group Analysis ($/MHz-POPs) (2)
$0.09 $0.17
Selected Spectrum Precedent Transactions
$/MHz-POP (12/31/12 Balance Sheet) (3)(4)
$0.18 $0.26
$/MHz-POP (9/30/13 Balance Sheet) (3)(4)(5)
0.18 0.26
Precedent Premia Paid Analysis
Pre-SoftBank (6)(7)
25.0% 45.0%
As of 11/20/12 (7)(8)
25.0% 45.0%
DCF Analysis
SCC (12.5% - 17.5% Disc. Rate; 2.0% - 4.0% Perp. Growth)
MCC (12.5% - 17.5% Disc. Rate; 2.0% - 4.0% Perp. Growth)
$2.90 - Current Sprint Offer Price
$3.15 - Clearwire Counterproposal
$0.90 $2.69
$0.83 $4.00
($0.82) $1.69
$2.01
$4.52
$1.53
$4.04
Includes net proceeds from potential spectrum sale per Dish “Thoughts” document
$ 1.64
$2.36
$2.38
$2.95
$1.88)
($0.49)
($0.01)
$1.39
$4.14
$11.31
($2)
($1)
$0
$1
$2
$3
$4
$5
$11
$12
Source: Company filings, Management projections, Bloomberg, FactSet, Wall Street research
(1) Based on 7 analysts as of 11/12/12; Average 12/31/12 price target of $2.58. Low end price target of $0.83 represents $1.00 12/31/13 price target discounted back 1 year at a cost of equity of 20.00%
(2) Based on $0.09/MHz-POP implied from LightSquared (currently in Chapter 11) debt trading levels, and $0.17/MHz-POP based on current Globalstar enterprise value (assuming no value for existing business)
(3) Based on 47.0bn MHz-POPs
(4) Assumes no value for net assets and includes no costs associated with on-going commitments and liabilities, based on Management guidance
(5) Cash and debt balance per SCC Case
(6) Represents 1 day before SoftBank/Sprint acquisition rumor (10/10/12)
(7) Relevant range based on analysis of one day, 1-week prior, 4-week prior premiums of a) all cash transactions >$500mm b) all cash transactions >$500mm where acquirer stake increases from <50% to 100% b) all cash transactions >$500mm where acquirer already had >50% stake and increased ownership to 100%
(8) Represents 1 day before initial Sprint proposal
Evercore Partners
11
Valuation Analysis
Preliminary Draft - Confidential
Analysis At Various Prices
($ in millions)
Pre-SoftBank
11/20/12 (1)
Current Share Price (12/7/12)
Initial Sprint Proposal (11/21/12)
Revised Sprint Proposal (12/6/12)
Latest Sprint Proposal (12/9/12)
Sprint/ Eagle River Deal (10/18/12)
Clearwire Initial Counter (12/3/12)
Share Price
$1.30 $2.12 $2.39 $2.60 $2.80 $2.90 $2.97 $3.15
% Premium to Current ($2.39)
(45.6%) (11.3%) 0.0% 8.8% 17.2% 21.3% 24.3% 31.8%
% Premium to 11/20/12 ($2.12)
(38.7%) 0.0% 12.7% 22.6% 32.1% 36.8% 40.1% 48.6%
% Premium to Pre-SoftBank ($1.30) (2)
0.0% 63.1% 83.8% 100.0% 115.4% 123.1% 128.5% 142.3%
% Premium to Pre-SoftBank 52 Week High ($2.50)
(48.0%) (15.2%) (4.4%) 4.0% 12.0% 16.0% 18.8% 26.0%
% Premium to Pre-SoftBank 52 Week Low ($0.90)
44.4% 135.6% 165.6% 188.9% 211.1% 222.2% 230.0% 250.0%
% Premium to Pre-SoftBank 30 Day VWAP ($1.47)
(11.7%) 44.1% 62.4% 76.7% 90.3% 97.1% 101.8% 114.0%
% Premium to Pre-SoftBank 90 Day VWAP ($1.38)
(6.0%) 53.3% 72.8% 88.0% 102.5% 109.7% 114.8% 127.8%
% Premium to Pre-SoftBank 180 Day VWAP ($1.65)
(21.1%) 28.7% 45.1% 57.8% 70.0% 76.1% 80.3% 91.2%
Fully-Diluted Shares Outstanding
1,494 1,495 1,495 1,495 1,495 1,495 1,495 1,495
Implied Equity Value
$1,942 $3,168 $3,572 $3,887 $4,186 $4,335 $4,440 $4,709
Plus: Debt (12/31/12) (3)(4)
4,486 4,486 4,486 4,486 4,486 4,486 4,486 4,486
Less: Cash (12/31/12) (4)
(828) (828) (828) (828) (828) (828) (828) (828)
Implied TEV
$5,600 $6,826 $7,230 $7,544 $7,843 $7,993 $8,097 $8,367
Plus: NPV of Leases (5)
1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800
Adjusted TEV (For Leases)
$7,400 $8,626 $9,030 $9,344 $9,643 $9,793 $9,897 $10,167
Implied $/MHz-POP (6)
$0.16 $0.18 $0.19 $0.20 $0.21 $0.21 $0.21 $0.22
Value of SIG Shares (13.0%) (7)(8)
$248 $405 $457 $497 $535 $554 $568 $602
Value of Public Shares (36.5%) (8)
734 1,197 1,349 1,468 1,581 1,637 1,677 1,779
Total Value of Non-Sprint Shares (49.6%) (8)
$982 $1,602 $1,806 $1,965 $2,116 $2,192 $2,245 $2,381
vs. Initial Proposal
151 227 280 416
% Premium to Initial Proposal Offer Price
7.7% 11.5% 14.2% 21.2%
Source: Management Projections
(1) Represents 1 day before initial Sprint proposal
(2) Represents 1 day before SoftBank/Sprint acquisition rumor (10/10/12)
(3) Debt amount excludes Sprint promissory note of $150mm for working capital purposes
(4) Debt and cash estimated as of 12/31/12 by Management
(5) 2012 annual lease payments of $180mm with 2.0% perpetuity growth rate discounted at cost of 1st lien debt, 12.0%, assuming payments are made into perpetuity
(6) $/MHz-POP calculated based on 47.0bn MHz-POPs
(7) Includes Bright House, Comcast and Intel
(8) Percentage ownerships shown is based on basic share count. Value of stake calculated is based off of fully-diluted share count. All dilutive securities assumed to belong to public shareholders
Evercore Partners
12
Valuation Analysis
Preliminary Draft - Confidential
Precedent Spectrum Transactions
($ in millions)
$0.40
$0.35
$0.30
$0.25
$0.20
$0.15
$0.10
$0.05
$0.00
2.5 GHz
WCS
S-Band
L-Band
$0.35 (3)
Sprint/Eagle River ($2.97 offer price) implies $0.21/MHz-POP
Pre-Sprint/SoftBank price ($1.30) implies $0.16/MHz-POP
$0.26
$0.23 (7)
$0.25 (10)
$ 0.21 (1)
$0.21
$0.21 (5)
$0.19 (4)
$0.18
$/MHz-POPs
$0.15 (8)
$0.13 (6)
Indicative DISH/Clearwire
Sprint/ Eagle River (Clearwire)
Sprint/ Clearwire
Clearwire/ BellSouth
AT&T/ NextWave (A&B Block)
AT&T/ NextWave (All)
DISH Network/ Terrestar
DISH Network/ Terrestar
DISH Network/ DBSD North America
DISH Network/ DBSD North America
Harbinger (Lightsquared)/ SkyTerra
Frequency
2.5 GHz 2.5 GHz 2.5 GHz 2.5 GHz 2.3 GHz 2.3 GHz 2 - 2.2 GHz 2 - 2.2 GHz 2 - 2.2 GHz 2 - 2.2 GHz 1.5 - 1.6 GHz
Band
EBS/BRS EBS/BRS EBS/BRS BRS WCS WCS S S S S L
Transaction Value
$2,432 $9,897(2) $7,400 $300 $600 $540 $1,375 $874 $1,400 $899 $1,849(9)
Total MHz-POPs
11,367 46,600 29,000 1,700 1,554 2,820 6,600 6,600 6,000 6,000 7,500(10)
Announcement Date
10/18/12 05/07/08 02/15/07 08/02/12 08/02/12 06/14/11 06/14/11 02/01/11 02/01/11 09/23/09
Source: Company Filings, Wall Street Research
(1) $0.216/MHz-POP blended price for both owned and leased spectrum, based on Dish “Thoughts” document
(2) Implied Transaction Value - Uses implied share price of $2.97; FDSO of 1,495mm; Debt of $4,486mm; Cash of $828mm; NPV of Leases of $1,800mm
(3) Calculated using WCS A & B only; Assumes $60mm ($0.69 per MHz-POP) value for AWS included in the transaction; assumes $0 for WCS C&D; If $0 value is attributed to the AWS, $/MHz POP is $0.39
(4) Calculated using WCS A, B, C, & D; Assumes $60mm ($0.69 per MHz-POP) value for AWS included in the transaction; If $0 value is attributed to the AWS, $/MHz POP is $0.21
(5) Using US & Canada Population (330mm)
(6) Adjusted for Net Book Value of Terrestar-1 Satellite ($501.2mm)
(7) Using US Population only (300mm)
(8) Adjusted for Net Book Value of DBSD-G1 Satellite ($501.3mm)
(9) Sourced from Skyterra News Release
(10) Valuation based on total MHz-POPs from the Skyterra proxy dated 2/26/10
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Valuation Analysis
Preliminary Draft - Confidential
Preliminary Premiums Paid Analysis
The tables below summarize the results of three data sets of premiums paid for U.S. targets
- All cash transactions for U.S.-based companies with transaction values between $500 million - $10.0 billion since January 2000 in which acquirer purchased 100% of target
- All cash “Minority-Led” transactions, in which acquirer had ownership of less than 50% of target prior to the transaction and acquired 100% of target, for U.S. targets with a minimum transaction value of $500 million from January 2000
- All cash “Majority-Led” transactions, in which acquirer had ownership of more than 50% of target prior to the transaction and acquired 100% of target, for U.S. targets with a minimum transaction value of $500 million from January 2000
All Cash Transactions
Number of Transactions
611
Premium Paid
1 Day Prior 1 Week Prior 4 Weeks Prior
Mean
30.4% 32.7% 36.8%
Median
26.6% 28.5% 31.7%
Top 25% Median
52.4% 56.8% 60.9%
Bottom 25% Median
7.7% 9.5% 13.1%
Minority-Led Transactions
Number of Transactions
23
Premium Paid
1 Day Prior 1 Week Prior 4 Weeks Prior
Diff. Final/ Initial Prem.(1)
Mean
38.0% 38.9% 40.8% 14.5%
Median
30.2% 32.7% 44.5% 11.6%
Top 25% Median
70.9% 67.9% 67.2% 27.6%
Bottom 25% Median
10.4% 13.1% 16.1% 3.8%
Majority-Led Transactions
Number of Transactions
16
Premium Paid
1 Day Prior 1 Week Prior 4 Weeks Prior
Diff. Final/ Initial Prem.(1)
Mean
25.2% 27.8% 30.6% 14.6%
Median
25.8% 27.7% 24.7% 16.0%
Top 25% Median
41.6% 45.3% 45.7% 26.0%
Bottom 25% Median
8.8% 9.3% 11.5% 8.6%
Source: SDC, Factset, Company filings
Note: Transaction Value is Equity Value Acquired
(1) Difference between the Final 1-Day Premium and the Initial 1-Day Premium; Excludes deals where there was no change between Initial and Final Prices
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Valuation Analysis
Preliminary Draft - Confidential
DCF Analysis
($ in millions, except per share amounts)
SCC
Implied Share Price
Perpetuity Growth Rate
2.0% 3.0% 4.0%
12.5% ($0.58) ($0.32) ($0.01)
Discount Rate
15.0%
(1.37) (1.23) (1.06)
17.5%
(1.88) (1.79) (1.70)
Implied Terminal Multiple
Perpetuity Growth Rate
2.0% 3.0% 4.0%
12.5% 5.1x 5.7x 6.5x
Discount Rate
15.0% 4.2 4.6 5.1
17.5% 3.6 3.8 4.2
In SCC, if Clearwire were to enter into a definitive agreement to sell 40MHz of spectrum to DISH based on the summary terms contained in “Thoughts” document, Clearwire will receive $2.1bn of net proceeds or an additional $1.39/share
MCC
Implied Share Price
Perpetuity Growth Rate
2.0% 3.0% 4.0%
12.5% $9.21 $10.15 $11.31
Discount Rate
15.0% 6.20 6.75 7.38
17.5% 4.14 4.47 4.85
Implied Terminal Multiple
Perpetuity Growth Rate
2.0%
3.0%
4.0%
Discount Rate
12.5% 5.5x 6.2x 7.0x
15.0% 4.5 4.9 5.4
17.5% 3.8 4.1 4.5
Source: Management projections
Note: Valuation dates as of 12/31/12; includes PV of NOLs
Debt amount excludes Sprint promissory note of $150mm for working capital purposes
Assumes existing NOLs are restricted and not available for use. NOLs after 2012 assumed not to be restricted and utilized to offset taxes
MCC includes conversion of 2040 Exchangeable Notes into shares if fully-diluted share price exceeds $7.08/share (conversion price): reduction in debt of $629mm as notes are converted into ~89mm shares
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Appendix
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Appendix
Preliminary Draft - Confidential
Historical Operating and Financial Metrics
($ in millions)
2009 2010 2011 2012E
POPs (mm)
42 114 134 134
Wholesale (mm)
0.05 3.25 9.12 7.43
Retail (mm)
0.60 1.10 1.29 1.34
Total Subscribers (mm)
0.64 4.35 10.42 8.77
Wholesale Revenue
NA $481 $494 $468
Retail Revenue
NA 51 758 794
Other Revenue
NA 4 2 0
Revenue
$244 $535 $1,253 $1,262
Adj. EBITDA
(781) (1,057) (314) (168)
Capex
(1,540) (2,655) (226) (157)
LFCF
($2,012) ($3,824) ($1,157) ($624)
Cumulative LFCF
(2,012) (5,836) (6,993) (7,617)
Cash Balance
1,700 1,733 1,108 828
Source: Company Filings, Management Projections
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Appendix
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Current Capital Structure
($ in millions)
12/31/12
11/20/12(1) 10/10/12(2)
Face Val. Coupon Maturity Price YTM YTW Price YTM YTW
Cash and Cash Equivalents (3)
$828
Debt
12.000% Senior Secured Notes due 2015
$2,947 12.000% 12/1/15 105.625 9.806% 9.806% 99.250 12.281% 12.281%
14.750% Senior Secured Notes due 2016
300 14.750% 12/1/16 124.500 7.580% 7.580% 108.250 12.143% 12.143%
12.000% 2nd Priority Secured Notes due 2017
500 12.000% 12/1/17 110.000 9.454% 9.236% 92.500 14.087% 14.087%
8.250% Exchangeable Notes due 2040
629 8.250% 12/1/40 95.000 8.730% 9.523% 72.875 11.509% 16.217%
Vendor Financing Notes due 2014/2015
47 L+550 2014/2015
Capital Lease Obligations
62 NA NA
Total Debt
$4,486
Total Debt
$4,486
Net Debt
$3,657
Since the announcement of the Sprint/SoftBank deal, Clearwire debt prices have rallied significantly
Source: Company Filings, FactSet
(1) Represents 1 day before initial Sprint proposal
(2) Represents 1 day before SoftBank/Sprint acquisition rumor
(3) Estimated cash balance as of 12/31/12
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Appendix
Preliminary Draft - Confidential
Clearwire Historical Bond Yields
Historical Bond Yields
50.0%
40.0%
30.0%
20.0%
10.0%
10.0%
9.2%
7.0%
0.0%
4/25/11
8/21/11
12/17/11
4/14/12
8/10/12
12/7/12
12% Sr. Secured due ‘15
14.75% Sr. Secured due ‘16
12% 2nd Priority due ‘17
Historical Bond Yields Since 1 Month Prior to Sprint / SoftBank Deal
15.0%
10.0%
10.0%
9.2%
7.0%
5.0%
0.0%
Yields
10/10
10/11
Change
2015 Notes
12.3%
10.5%
(1.8%)
2016 Notes
12.1%
7.7%
(4.4%)
2017 Notes
14.1%
10.5%
(3.6%)
8/31/12
9/19/12
10/9/12
10/28/12
11/17/12
12/7/12
Source: Bloomberg
12% Sr. Secured due ‘15
14.75% Sr. Secured due ‘16
12% 2nd Priority due ‘17
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. |
Appendix
Preliminary Draft - Confidential
Preliminary Premiums Paid Analysis
Precedent Median Premiums
Implied Share Price
Share Price All Cash Minority-Led Majority-Led All Cash Minority-Led Majority-Led
Pre-SoftBank (10/10/12)
Spot Price
$1.30 26.6% 30.2% 25.8% $1.65 $1.69 $1.64
1-Week Prior
$1.34 28.5% 32.7% 27.7% 1.72 1.78 1.71
4-Weeks Prior
$1.63 31.7% 44.5% 24.7% 2.15 2.36 2.03
High
Low
31.7% 44.5% 27.7% $2.15 $2.36 $2.03
26.6% 30.2% 24.7% 1.65 1.69 1.64
One Day Before Initial Sprint Proposal (11/20/12)
Spot Price
$2.12 26.6% 30.2% 25.8% $2.68 $2.76 $2.67
1-Week Prior
$2.22 28.5% 32.7%27.7% 2.85 2.95 2.84
4-Weeks Prior
$1.91 31.7% 44.5% 24.7% 2.52 2.76 2.38
High
Low
31.7% 44.5% 27.7% $2.85 $2.95 $2.84
26.6% 30.2% 24.7% 2.52 2.76 2.38
Source: SDC, Factset, Company filings
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Appendix
Preliminary Draft - Confidential
Implied Share Price Based on Spectrum Valuation
($ in millions)
$ / MHz-POP
$0.18 $0.22 $0.26
Adjusted TEV (1)
$8,460 $10,171 $12,220
Less: NPV of Spectrum Leases (2)
(1,800) (1,800) (1,800)
Net Proceeds
$6,660 $8,371 $10,420
Less: Debt (12/31/12) (3)(4)
(4,486) (4,486) (4,486)
Plus: Cash (12/31/12) (4)
828 828 828
Implied Equity Value
$3,003 $4,714 $6,763
Implied Share Price (12/31/12)
$2.01 $3.15 $4.52
Implied Share Price (9/30/13) (5)
$1.53 $2.67 $4.04
Source: Company filings; Management estimates
Note: Assumes no value for net assets and includes no costs associated with on-going commitments and liabilities, based on Management guidance
(1) Based on a sale of all spectrum (47.0bn MHz-POPs)
(2) 2012 annual lease payments of $180mm with 2.0% perpetuity growth rate discounted at yield of 1st lien debt, 12.0% assuming payments are made into perpetuity
(3) Debt amount excludes Sprint promissory note of $150mm for LTE expansion
(4) Based on Management estimates for debt and cash
(5) Based on SCC: estimated 9/30/13 debt balance of $4,471mm and estimated 9/30/13 cash balance of $92mm
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Appendix
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Management Plans vs. Street Estimates
($ in millions)
2012 2013 2014 2015 ‘12 - ‘15 CAGR
Revenue
Consensus Estimate
$1,266 $1,344 $1,353 $1,579 7.6%
MCC
$1,262 $1,207 $1,082 $2,351 23.0%
Consensus vs. MCC
(0.3%) (10.2%) (20.0%) 48.9%
SCC
$1,262 $1,191 $839 $1,211 (1.4%)
Consensus vs. SCC
(0.3%) (11.4%) (38.0%) (23.3%)
EBITDA
Consensus Estimate
($164) ($152) ($42) $189 NM
MCC
($168) ($ 280) ($482) $ 748 NM
SCC
($168) ($ 267) ($717) ($ 387) NM
Source: Management Projections, FactSet
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Appendix
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Research Analyst Summary
Price Target Rating Valuation Methodology DCF Assumptions $ / MHz-POP
Bank of America Merrill Lynch (10/25/12)
$4.00 Buy Spectrum NA $0.15 - 0.30
Guggenheim Partners (10/26/12)
$3.00 Buy DCF NA NA
RBC (11/8/12)
$2.50 Hold Spectrum NA $0.25
D.A. Davidson (10/26/12)
$3.00 Buy Spectrum NA $0.20 - 0.25
Jefferies (10/26/12)
$2.00 Hold DCF NA NA
Evercore Partners (10/25/12)
$1.75 Hold Spectrum NA $0.35
Morgan Stanley (10/26/12)
$1.00 Sell DCF WACC: 13.0% Perp. Growth: 4.0% NA
J.P. Morgan (12/5/12)
$4.00 Hold Spectrum NA $0.28
Macquarie (11/1/12)
$2.75 Hold DCF NA NA
UBS (10/26/12)
$1.75 Hold DCF WACC: 15.0% Perp. Growth: 0.5% NA
Average Target Price
$2.58
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Appendix
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Ownership Analysis
Investor
Class A Shares % Class A Class B Shares % Class B Class A Equivalents %
Sprint
30,922,958 4.5% 708,087,860 91.5% 739,010,818 50.4%
Comcast
88,504,132 12.8% -- 0.0% 88,504,132 6.0%
Bright House
8,474,440 1.2% -- 0.0% 8,474,440 0.6%
Intel
28,432,066 4.1% 65,644,812 8.5% 94,076,878
6.4%
Eagle River
-- 0.0% -- 0.0% -- 0.0%
Other Shareholders
535,537,147 77.4% -- 0.0% 535,537,147 36.5%
Total
691,870,743 100.0% 773,732,672 100.0% 1,465,603,415 100.0%
Source: Management
Note: Sprint shareholdings pro forma for purchase of shares from Eagle River As of 12/7/12
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Appendix
Preliminary Draft - Confidential
Trading Comparables - Implied Spectrum Values
Company Price 12/7/12 Market Value TEV Adjusted TEV (1) Frequency MHz Total POPs MHz-POPs Implied $/MHz-POPs
Clearwire
$2.39 $3,570 $6,858 $8,658 (2) 2.5GHz NA NA 46,600 $0.19
Globalstar(3)
$0.40 $196 $988 $988 1.6/2.4 GHz 19.3 300 5,783 $0.17
LightSquared (4)
NA -- 1,597(5) 1,597 MSS 59.0 (6) 300 17,700 0.09
Source: Company Filings, Wall Street Research
(1) Calculated as TEV + NPV of Spectrum Leases - Value of Operations
(2) Assumes $0 for Value of Operations; Assumes $1,800mm for NPV of Spectrum Leases
(3) Assumes $0 for Value of Operations; Assumes no Spectrum Leases; 19.3MHz of terrestrial spectrum excludes international spectrum
(4) Company is currently in Chapter 11; Assumes $0 for Market Value of Equity
(5) Uses Market Value of Debt and Preferred Equity; Term Loan of $1,701mm trading at $0.823 (Markit 12/7/12); Assumes HoldCo Term Loan of $322mm includes PIK interest and a trading value equal to the Term Loan
($0.823); DIP facility of $41.4mm; Cash Balance of ~$217mm as at 8/31/12; Assumes $165mm of preferred equity trading at $0.65 (Markit 11/15/12)
(6) LightSquared owns a total of 59MHz spectrum, of which 40MHz is 1.6GHz L-Band Spectrum
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