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Sprint comes to aid of struggling Clearwire
02 December 2011
WiMax operator Clearwire pays $237m interest as Sprint CEO Dan Hesse negotiates lower prices and promises equity funding
Troubled US WiMax operator Clearwire has made $237 million of interest payments that were due on December 1, apparently with the help of Sprint, which has announced a deal to give it cheaper wholesale access to Clearwire’s network.
Sprint said it would pay up to $1.6 billion over the next four years in payments for Clearwire’s WiMax services as well as possible pre-payments for LTE services and potential equity investments.
Dan Hesse, CEO of Sprint, said the agreement “provides Sprint improved pricing, allows us to continue to provide WiMax 4G services to our customers and to new customers in the future and provides additional LTE capacity to help complement our network vision strategy and meet our customers’ growing data demands.”
Sprint was an early supporter of WiMax as a 4G technology, initially as a rival to Clearwire and then as the largest shareholder in the merged company. However, Sprint is now in the same LTE camp as Verizon Wireless and AT&T, its two big US rivals.
The current official position is that Clearwire will build an LTE Advanced network to which Sprint will have wholesale access.
Erik Prusch, president and CEO of Clearwire, said: “Today’s announcement is an important step toward meeting Clearwire’s key goals of extending our current 4G network arrangement, securing a commitment to our future LTE Advanced-ready network, and funding the business.”
US commentator and analyst Jeff Kagan commented: “Sprint Nextel will use Clearwire until it builds out its own 4G network. What then for Clearwire? Can they make it? That is the question. I don't like the hand they are playing at this time.”
Clearwire and Sprint said they will work together to support the ecosystem for the TDD version of LTE, initially developed for China Mobile. Sprint said that it expects to launch devices including laptop cards and phones that will use Clearwire's TDD-LTE network in 2013.
Sprint added that it has committed to providing additional equity funding to Clearwire in the event of an equity offering. If Clearwire raises new equity between $400 and $700 million, Sprint will participate in the offering on a pro rata basis up to $347 million. “Clearwire has been struggling and needs financial help,” said Kagan. GTB
Further reading from Global Telecoms Business:
Sprint and Clearwire to extend network deal 28 Oct 2011
Sprint 'to introduce LTE' in 2012 29 Sep 2011
Sprint reported 'in talks' about Clearwire 19 Aug 2011
Sprint reduces voting rights in Clearwire 09 Jun 2011
Clearwire hands net management to Ericsson 19 May 2011