TrendU.S. wireless landascpe about to change
Clearwire, Sprint Nextel to form $14.55 billion wireless company which will deploy WiMAX networks across the United States; WiMAX’s speed dwarfs current wireless technologies, holding the potential of rendering cable and phone line Internet obsolete
The U.S. wireless landscape is changing. The key move: Clearwire and Sprint Nextel are set to combine their wireless broadband units to create a $14.55 billion communications company. The new company, to be named Clearwire, will receive a $3.2 billion investment from Intel, Google, Comcast, Time Warner Cable, and Bright House Networks. The investment is based on a target price of $20 per Clearwire share and will give the companies a 22 percent stake in the new venture. Overland Park, Kansas-based Sprint Nextel will be majority owner with a 51 percent equity stake, while existing Clearwire shareholders will receive about 27 percent interest. Clearwire, which will concentrate on rolling out a mobile network based on the emerging WiMAX standard, will also receive an investment from Trilogy Equity Partners, led by U.S. wireless industry veteran John Stanton.
WiMAX promises faster download speeds than the latest networks run by cell-phone operators, and it is even seen as a potential competitor to fixed-line broadband. Rivals such as AT&T and Verizon Wireless have eschewed WiMax, opting instead for upgrades to their current wireless broadband networks and a future technology called Long Term Evolution. Clearwire already provides wireless Internet service in some parts of the country, using a WiMax-like technology. The company had a subscriber base of nearly 400,000 wireless broadband customers at the end of 2007. The new company is looking for a U.S. network deployment between 120 million and 140 million people by the end of 2010. Sprint and Clearwire, a startup founded by cellular pioneer Craig McCaw, had already announced their plans to build out networks using WiMAX technology, but had been looking for outside funding.
The new company will be led by Clearwire chief executive Benjamin Wolff, with Sprint CTO Barry West serving as president. West also leads Sprint’s XOHM division. The Kirkland, Washington-based venture will house workers from Clearwire and Sprint’s XOHM unit and will have research and development and other operations located in Herndon, Virginia. Its board will consist of thirteen members at the start. Sprint will name seven of them, which will include at least one independent director. The investor group will name four members, including one independent. Eagle River, a private investment company controlled by McCaw, will name one member, with the remaining independent member selected by Clearwire’s nominating committee. McCaw is expected to serve as nonexecutive chairman. Other anticipated board members include Sprint president and
