Clearwire raises $1.5 billion to continue WiMax buildout

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.

TOPICS: Mobility, Wi-Fi

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.

Topics: Mobility, Wi-Fi

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  • how many years now has this rollout been happening???

    how long has it been "just around the corner"?
    ..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

      I suspect one problem is that it is taking longer (and costing more) to run fiber to all of their sites.

      With the rest of the world moving towards LTE, WiMAX will be a niche player.
    • There's reality and there's . . .

      WiMAX made some pretty extraordinary claims before it showed up too, so I'm taking those 100 Mb/s claims for LTE with a grain of salt. With the spectrum limited and the FCC also limiting transmit power, I don't see how LTE could be leaps and bounds better than WiMAX. You can only do so much with a quarter watt of power . . .
      Roger Ramjet
      • Because marketing people do all the talking

        You are right to be skeptical.

        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

      Better late than never. WiMax will provide some competition to the cellular carriers, who are well known for blocking innovation by stripping out features from cell phones, and charging high fees for data plans.

      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

    My family tried Clearwire. They are a horrible company with horrible service. They make AT&T look competent.