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CLWR hooking up w/ Sprint again
Sprint Revives Talks With Clearwire
Over Forming WiMax Joint Venture
By AMOL SHARMA and MATTHEW KARNITSCHNIG
January 29, 2008 2:52 p.m.
Sprint Nextel Corp. has revived serious discussions with startup Clearwire Corp. to form a joint venture that would bring in outside funding from the likes of Intel Corp., Google Inc. and retailer Best Buy Co. to build a high-speed wireless network using WiMax technology, according to people familiar with the matter.
The plan could dramatically lower the price tag of Sprint's WiMax project and allow newly installed Chief Executive Officer Dan Hesse to focus on fixing the company's core cellphone business -- answering two concerns Sprint investors have had.
There's no guarantee the joint venture will materialize, or that Sprint and Clearwire will secure external funding, despite the advanced discussions. Last year Sprint and Clearwire tentatively agreed to a more modest cost-sharing partnership on WiMax, but the deal was scrapped in November, partly because Sprint was operating without a CEO at the time and was reluctant to make any major moves. Since then, the two sides have re-engaged on a more ambitious plan that would involve spinning off Sprint's WiMax unit and merging it with Clearwire, people familiar with the matter say.
Wall Street is looking for any signs of life at Sprint, the nation's third largest cellular operator, which has seen an exodus of subscribers to rivals AT&T Inc. and Verizon in recent months. The company's shares have slid steadily in recent months and took a deep plunge two weeks ago when the carrier warned of high subscriber losses in the fourth quarter, though the stock has rebounded in recent days.
Sprint has already begun rolling out its WiMax network in some markets and has said it wants to reach 100 million U.S. consumers by the end of this year. WiMax is designed to provide high-speed wireless Internet access from laptops and cellphones. Most analysts say Sprint and Clearwire could build a nationwide network much more quickly and cost effectively if they join forces, since they own vast amounts of radio spectrum in different regions of the country.
For Clearwire, a Kirkland, Wash. startup founded by cellphone pioneer Craig McCaw, sealing an agreement with Sprint would be a major boost. The company's share price tumbled 25% last fall when the two sides ripped up their initial agreement.
Sprint and Clearwire have been aggressively reaching out for strategic financing. They've talked to Google, Intel, Best Buy and some cable providers in recent weeks about financing a WiMax initiative. And Wall Street was buzzing today about the potential that a foreign strategic telecom investor might also jump in. Representatives from Google, Intel and Best Buy declined to comment.
Even as Sprint hunts for financing for its broadband project, it is attracting separate interest from private equity firms who see its relatively low stock price as a chance to buy a significant equity stake in the company, people close to the situation say. New financing could help Sprint pay for its WiMax initiative without raising any new debt, but the company might be reluctant to issue new shares now, because that could anger investors who bought in at a much higher valuation.
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