Sprint, Clearwire make it official
Sprint Nextel Corp. and Clearwire Corp. on Wednesday resurrected their plan to offer high-speed mobile Internet service with the help of some deep-pocketed supporters.
The two companies said they would combine their wireless broadband units to create a $14.6-billion communications company, to be called Clearwire, that will continue developing a mobile network based on WiMax technology.
WiMax is similar to Wi-Fi service found in coffee shops, airports and many homes, but it is more powerful and able to cover whole cities, in some cases.
It promises faster speeds than the latest cellular networks for movies, games and other data services.
“The agreement enables us to get to market faster and reach a broader audience than we could have if we went alone,” said Dan Hesse, Sprint’s chief executive.
A similar attempt at a partnership fell through last November. This time, however, the duo is getting help from a group of outside investors, including Intel Corp., Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks, which will kick in a total of $3.2 billion for the new company.
Clearwire also will receive an investment from Trilogy Equity Partners, led by U.S. wireless industry veteran John Stanton.
Sprint, based in Overland Park, Kan., will own 51% of the company. Existing shareholders in Clearwire Corp., a Kirkland, Wash., start-up founded by cellular pioneer Craig McCaw, will receive a combined stake of about 27%. And the investment group will have a 22% stake.
Wall Street’s reaction was mixed, grateful that Sprint will be able to focus on its struggling wireless service but worried the deal may have too many moving parts to be successful.
“If new Clearwire manages to avoid the massive channel conflicts it will have with its strategic partners and executes well -- both big challenges -- it has the potential to create significant competition for incumbent wireless and wire-line providers,” Oppenheimer & Co. analyst Tim Horan wrote in a research note.
“However, it is not entirely clear that this is their strategy,” Horan added.
Shares for Clearwire and Sprint initially surged on the news Wednesday, but Clearwire stock ended down 24 cents at $16.22 while Sprint’s fell 3 cents to $9.16.
