Clearwire raises $1.5 billion to continue WiMax buildout
Summary: Clearwire made it official: The company is raising $1.56 billion from its key investors so it can continue its 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.
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Talkback
how many years now has this rollout been happening???
..isn't WiMax pretty much irrelevant at this
point with 4G 100Mb/s LTE networks about to hit
in the next 1-2 years.. who in there right mind
would invest in this obsolete tech.. if it
actually rolled out when they said it would..
like 3-4 years ago maybe it would be relevant..
now it's just stupid...
Yes it has been a long build out
With the rest of the world moving towards LTE, WiMAX will be a niche player.
There's reality and there's . . .
Because marketing people do all the talking
However, the problem with LTE wont be because the FCC limits transmit power, it will be because the FCC poorly managed the 700MHz spectrum.
There are tons of unlicensed devices out there (wireless microphones,etc ), etc that can and will cause interference to LTE.
As for performance, it will all depend on how the operator implements the technology and maintains their network.
competition to cellular carriers is needed
Additionally, the cellular carriers' coverage
for 3G services is spotty, so consumers could
use all the coverage they can get.
The cellular carriers' bad behavior will
continue as their conversion to LTE will
not change things.
The WiMax market will be aided by Intel's
building WiMax into computer chipsets, so
consumers won't have to pay for a $50 USB dongle to have this capability.
Now if only someone would come up with a
chipset for standalone wireless routers, so
existing WiFi hotspots could be converted
into combination WiMax/WiFi hotspots.
RE: Clearwire raises $1.5 billion to continue WiMax buildout