Clearwire raises $1.5 billion to continue WiMax buildout
Updated: Clearwire made it official: The company is raising $1.56 billion from its key investors so it can continue its WiMax buildout.
Reports of the funding surfaced Monday. In a statement, Clearwire said that Sprint Nextel, Comcast, Time Warner Cable, Intel, Eagle River Holdings and Bright House Networks will fork over additional capital in exchange for new Clearwire shares priced at $7.33 each.
Sprint Nextel ponied up the most cash. Here's the breakdown:
- Sprint invested $1.176 billion.
- Comcast $196 million.
- Time Warner Cable $103 million.
- Intel $50 million.
- Eagle River for $20 million.
- And Bright House for $19 million.
The big name that's missing is Google. In a statement, Clearwire CEO Bill Morrow said that the funding will allow it to continue an aggressive WiMax rollout. Clearwire will get $1.057 billion in cash within five business days and the rest of the funding lands after two closing periods at the end of 2009 and the first quarter in 2010.
Meanwhile, Clearwire is raising $1.45 billion in debt that will pay off a $1.4 billion credit facility. The debt swap will allow Clearwire to raise another $240 million and give it a fixed interest rate.
Clearwire reports third quarter earnings later today and Wall Street is expecting a loss of 43 cents a share. The financing gives Clearwire more runway to roll out its WiMax services and generate more cash. Clearwire was betting on a big fourth quarter.
Update: Clearwire's earnings have landed (statement). The company reported a third quarter loss of $82.4 million, or 43 cents a share, on revenue of $68.8 million, up 13 percent from a year ago.
The company said that churn is likely to increase in pre-WiMax markets. Clearwire expects to spend $750 million in the fourth quarter, or $1.9 billion for 2009 on its build-out. That's at the high end of Clearwire's projected range and explains why the company needed to raise cash.
By the numbers for the quarter:
- Clearwire added 44,000 net subscribers to have a total of 555,000.
- Churn was 3.1 percent.
- And the average revenue per unit was $39.71.