Sprint, Clearwire Team for Nationwide WiMAX Network
Sprint Nextel and Clearwire will partner to build a nationwide WiMAX mobile broadband network, launching commercial service the first half of 2008, the companies said Thursday. No cash was exchanged, and the companies did not comment on whether an acquisition or similar deal was on the horizon. The arrangement is positive for both companies, with Clearwire benefiting most, analysts said.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
Sprint and Clearwire will start mobile WiMAX network deployment by year-end 2007, expecting to deploy WiMAX service to about 100 million people by year-end 2008. The effort, to run 20 years plus three 10-year renewal periods, will make each company more capital efficient while cutting network development and operating costs, they said. Details will be finalized within 60 days, they said.
Sprint and Clearwire will enable reciprocal roaming between their individual networks, which they will continue to build. This will give them capabilities “way beyond what each company could have done alone,” said Clearwire CEO Ben Wolff. The companies will work jointly on products and services, shared infrastructure, branding, marketing and distribution. The companies will exchange select 2.5 GHz spectrum to “optimize build-out, development and operation of the network,” they said. Sprint plans to provide CDMA-WiMAX dual-mode services. Clearwire may use “certain Sprint Nextel infrastructure” and offer Sprint 3G voice and data services, including Sprint’s planned dual-mode offerings, in a bundle or stand-alone to its customers. The agreement has no effect on the companies’ existing partnerships, such as Clearwire’s recent dealings with satellite companies EchoStar and DirecTV (CD June 15 p10), Wolff said.
WiMAX service will be sold under a common service brand, and Clearwire will offer the service through Sprint Nextel’s retail stores and its own distribution channels. Sprint will take the lead in establishing relationships with national distributors and other potential strategic partnerships, including wholesale or mobile virtual network operator arrangements, it said.
Sprint and Clearwire plan to take the combined brand abroad, with more on their international plan to surface in coming months, Wolff said. Clearwire now offers service in Ireland, Belgium and Denmark.
The teaming is particularly beneficial to Clearwire, analysts at UBS and Jeffries said. A Sprint partnership addresses Clearwire concerns about funding, purchasing power and national expansion, said Jeffries analyst Jonathan Schildkraut.
The arrangement could be seen as Sprint’s “real-world trial” to evaluate Clearwire’s value, Schildkraut said. The arrangement recalls Sprint’s dealing with its former PCS affiliates, which it mostly has bought up, he said, calling a Sprint acquisition of Clearwire “natural.” Alternately, Sprint might carve out its wireless broadband division and merge that new company with Clearwire, a far less likely step, he said. If Sprint is to make a move, it likely will not occur for 24-plus months, he said. Sprint and Clearwire declined to comment on the prospect of future financial dealings, but it is “possible that one party will owe compensation to the other party based on the specific assets being transferred,” a Clearwire spokeswoman said, saying “it will be some time before we know whether compensation will be owed and if so how much.”
The agreement is subject to antitrust and spectrum license transfer approval by the Justice Department and FCC. Sprint and Clearwire expect this process to finish by year end, Sprint CEO Gary Forsee said. That’s likely, since “there is no negative impact for the competitive landscape from a consumer perspective,” Schildkraut said.