Clearwire inks new network deal with Sprint

Clearwire inks new network deal with Sprint

Summary: Clearwire gains a lifeline thanks to another investment from Sprint.

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Clearwire has inked a new agreement with Sprint that should sustain the wholesale 4G network provider for at least a few more years.

Basically, the new agreement has the potential to provide an additional $1.6 billion in payments and funding to Clearwire.

Here's a breakdown of some of the most important numbers to know:

  • Clearwire strengthened its relationship and commitment to Sprint by first paying back $237 million in interest -- due today, December 1.
  • Sprint will pay Clearwire a total of $926 million, approximately two-thirds of which will be paid in 2012, for unlimited 4G WiMAX retail services during 2012 and 2013.
  • Sprint has pledged $350 million in advance for Clearwire's network technology over a period of up to two years for LTE capacity if Clearwire can hit certain milestones by June 2013.
  • If Clearwire can raise between $400 and $700 million, Sprint will offer up paying for approximately $347 million more in shares.

Clearwire still needs roughly $1 billion if it plans to update its network to the much more popular LTE technology.

Sprint is really the last major savior for Clearwire considering that Sprint is the only signficiant nationwide mobile provider that uses WiMax technology.

This latest contract is another milestone in continually evolving relationship between Clearwire and Sprint. This past April, the two powers completed a long-term, wholesale 4G agreement.

Under that deal, Sprint agreed to pay Clearwire a minimum of $1 billion in 2011 and 2012 for access to its 4G network. The payment plan consists of $300 million in 2011, $550 million in 2012 and $175 million upfront.

Shortly before that, Sprint CEO Dan Hesse reaffirmed Sprint's partnership with Clearwire in all potential scenarios.

Hesse continued upon those sentiments today in prepared remarks about the latest agreement:

These agreements are a result of the technical MOU we outlined during our third quarter results call and extend our relationship with Clearwire. It provides Sprint improved pricing, allows us to continue to provide WiMAX 4G services to our customers today 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.

The relationship between the two companies also potentially became stronger with the departure of Clearwire's former CEO Bill Morrow.

Topics: CXO, Networking, Telcos, IT Employment

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  • WiMax was a giant waste of resources for Sprint

    They should have focused on building an LTE network, and keeping their customers happy.
    otaddy