Sprint Seeks to Buy Rest of Clearwire for About $2.1 Billion

Sprint Nextel Corp. (S) proposed to acquire shares in wireless partner Clearwire Corp. it doesn’t already own in a deal that the third-largest U.S. carrier says would cost about $2.1 billion.

Sprint, which owns more than 50 percent of Clearwire, is seeking to acquire shares at $2.90 each, or 5.5 percent more than the stock’s closing price in New York yesterday, according to a regulatory filing today. Sprint proposed to provide interim financing of as much as $800 million.

Sprint is getting an influx of cash from Japan’s Softbank Corp. (9984), which agreed to buy 70 percent of Sprint for about $20 billion. Sprint agreed to buy Eagle River Holdings LLC’s 4.5 percent stake in Clearwire in October for $2.97 a share.

Clearwire shares jumped 2.6 percent to $2.75 yesterday in New York. The stock is up 42 percent this year.

Sprint originally formed the Clearwire joint venture in 2008, relying on $3.2 billion in investments from Google Inc. (GOOG), Intel Corp., and cable companies such as Comcast Corp. and Time Warner Cable Inc. The idea was to build a national wireless network that could compete with Verizon Wireless and AT&T Inc. (T)

Clearwire never lived up to those ambitions, and the project has yet to break even. Along the way, partners such as Google and Time Warner Cable have sold their stakes for a fraction of their original value.

Clearwire Reportedly to Unveil 4G Phone

4G Wireless Evolution

Voice is coming to 4G.

According to at least one report, Clearwire is expected to launch a device called the HTC EVO 4G soon.

The report labels the device “America’s first 4G-enabled phone,” and indicates Samsung (News - Alert) will be providing the wireless service provider with a similar device, which will be tagged with the Clearwire brand.

If this is true, it would of course mark the first time voice is provided over a 4G network, as the first iteration of 4G services – whether based on WiMAX orLTE ( News - Alert) technologies – are data only.

However, it’s unclear whether the phone will actually use the 4G network for voice traffic. Clearwire could potentially leverage the existing cellular network of its partner/investorSprint ( News - Alert) for the voice service.

Clearwire didn’t have anything about the phone news on its website this morning, and the company’s public relations person, Susan Johnston, was not available to comment on the matter when TMCnet call her this morning.

Clearwire's WiMax Rollout Faces Steep Hurdles

As posted by: Wall Street Journal

Though Clearwire Corp.'s recent merger with Sprint Nextel Corp.'s wireless broadband unit put it on more solid financial and strategic footing, the company still faces a steep climb as it tries to best rivals in the rollout of a new generation of mobile Internet access.

Clearwire hopes to beat rivals by at least two years with a "fourth generation," or 4G, wireless network. It will use a technology called WiMax to provide connections for laptops and smart phones that are about four times faster than today's 3G networks run by Verizon Wireless, AT&T Inc. and Sprint.

Building a nationwide network of WiMax towers quickly will be expensive. The deal with Sprint, which was completed late last month, brought an infusion of $3.2 billion from equity investors including Intel Corp., Google Inc. and several cable providers. That money will go toward initial build-outs in 2009, beginning with the 46 markets where Clearwire already offers a wireless service similar to WiMax through modems or cards that can be inserted in PCs.

But analysts say Clearwire may need $3 billion to $5 billion more to complete the mobile WiMax network. Chris King, a telecom analyst at Stifel Nicolaus, said if the credit markets don't improve, Clearwire would likely have to turn to its strategic equity investors for more capital.

Ben Wolff, Clearwire's chief executive, said in an interview that the company has the option of slowing down its build-out and using cash flow from its initial markets to fund further launches. "There is a scenario in which we'd build a little more slowly and you'd never need any more capital," he said. "Or we could be more aggressive and we'd have to look to acquire more debt or equity in either late 2009 or early 2010."

The strategy of slowing down the build-out to save costs has risks, however, because it might wipe out the effect of Clearwire's head-start in next-generation wireless broadband. "The question is, how much of a time advantage are they actually going to have," said Mr. King, whose model doesn't show Clearwire turning a profit until 2015. (He estimates a $688 million loss for 2008.)

Rival carriers, meanwhile, are moving gradually to a different wireless broadband technology called LTE, or Long Term Evolution. Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, is planning some trials of LTE late next year, with its first real build-out expected in 2010. AT&T, the nation's largest wireless carrier by subscribers, says it won't begin an LTE rollout for at least another two years, but it is planning to upgrade its 3G infrastructure in 2009 to match the speeds of WiMax.

In the U.S., Clearwire's WiMax network could become an outlier once telecom giants Verizon and AT&T launch their LTE networks and LTE chips are embedded in laptops and mobile devices. Mr. Wolff said Clearwire is taking steps to make sure its network can be tweaked later to allow compatibility with LTE, perhaps with a small piece of equipment being inserted into towers.

Mr. Wolff said timing isn't Clearwire's only way to gain an advantage over Verizon and AT&T. He notes Clearwire amassed a huge amount of radio spectrum, which is necessary to provide high-speed mobile Internet access, when it merged with Sprint's WiMax unit. And he said the fact the company doesn't have a cellphone business means it won't be concerned about cannibalizing legacy voice revenue with Web-based services like Internet telephony.

"You won't find us being burdened by the same kinds of constraints," he said.