Sprint discusses possible Clearwire takeover with cableco partners

22 Aug 2011

According to Bloomberg, Sprint Nextel has entered into talks with a number of US cablecos regarding potential investments that could lead to the outright acquisition of WiMAX operator Clearwire. The latter’s shareholders currently include Sprint Nextel (54%), Intel and Google, alongside cable operators Comcast, Time Warner Cable (TWC) and Bright House Networks. Under one scenario being discussed, Sprint would use the funds to acquire the equity in Clearwire that it does not already own. However, Bloomberg’s source admitted that the talks are preliminary, and no deal is imminent. Sprint and Comcast are believed to be discussing ways in which they can provide funding for the loss-making WiMAX operator so that it can build out its recently announced Long Term Evolution (LTE) network. Clearwire plans to spend about USD600 million to upgrade its network and compete against mobile operators AT&T and Verizon Wireless.

TeleGeography’s GlobalComms Database writes that Clearwire has wholesale service agreements in place with all of its shareholders, most notably with Sprint, which allows the latter to purchase mobile broadband data services from Clearwire for resale to consumers. However, Clearwire has reportedly struggled to meet its cash needs as it builds out its network, and in February 2011 it was reported that Clearwire was poised to abandon its contentious retail strategy, and concentrate on its wholesale operations, allowing it to conserve cash to bankroll the development of its high speed network. In the past Sprint has openly objected to Clearwire’s retail strategy, on the basis that it is expensive to maintain, and involves the two companies directly competing with each other for retail customers.