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Sprint, Clearwire WiMAX business gets $3.2B investment

Clearwire Corp. has completed the transaction with Sprint Nextel Corp. to combine their next-generation wireless Internet businesses.

The new company will retain the Clearwire name and expects to build the first nationwide 4G mobile broadband network focused on meeting the evolving needs and demands for Internet-based communications services. In addition, Clearwire has received a $3.2 billion investment from Comcast, Intel, Time Warner Cable, Google and Bright House Networks.

"For Sprint, since we are the largest shareholder and have an MVNO relationship with Clearwire, it affords us the opportunity to be the only wireless carrier that can provide customers with a 4G mobile broadband network where available as well as continuing to provide the largest and most dependable 3G network," said Scott Sloat, Bethesda, MD-based spokesman for Sprint.

"We will be launching a dual-mode device before the end of the year that will allow users to utilize the 4G network where it is available -- currently in Baltimore -- and use Sprint's 3G network when they are not in 4G coverage," he said.

The transaction with Sprint and the new cash investment were completed on the terms originally announced on May 7, 2008.

Clearwire received the $3.2 billion investment from communications, entertainment and technology companies, including Comcast, Intel through Intel Capital, Time Warner Cable, Google and Bright House Networks.

As a group, these investors initially acquired approximately 22 percent of the new Clearwire and its operating subsidiary.

Clearwire will receive an additional investment from Trilogy Equity Partners in the coming months.

Clearwire's open all-IP network utilizes mobile WiMAX technology, providing customers with average download speeds initially of 2-4 megabits per second and peak rates that the company claims are considerably faster.

However, the company noted that its spectrum holdings enable Clearwire to provide mobile broadband services.

At the closing, Sprint contributed its entire 2.5 GHz spectrum holdings to Clearwire.

With this combined spectrum portfolio, Clearwire now has 100 MHz or more of 4G spectrum in most markets across the U.S.

The company also announced today that, while its company name will remain Clearwire, its new mobile WiMAX services will be branded Clear.

The Clear brand will apply to all new mobile WiMAX services to be offered by Clearwire in the U.S. and will be phased in to those markets where Clearwire offers pre-WiMAX services, as these existing markets are upgraded to mobile WiMAX technology.

In the coming months, the Clear brand will replace the XOHM service name previously used by Sprint Nextel in the Baltimore, MD, market.

Clearwire claims that current XOHM customers will not experience any impact as a result of the transaction and will continue to receive various notebook computing, portable multimedia and Internet devices, service plans and features.

In addition, the company unveiled a new marketing tagline, "Let's Be Clear," that will be used in conjunction with the new Clear service brand in upcoming market launches.

The new marketing efforts will clearly communicate the service's unprecedented combination of speed, mobility and simplicity.

Benjamin G. Wolff will continue to serve as Clearwire's chief executive officer, and Perry Satterlee continues as the company's chief operating officer.

Sprint's two most senior WiMAX leaders have joined Clearwire's management team.

Barry West, who served as Sprint's chief technology officer and XOHM business unit leader, is now president and chief architect of Clearwire, and Atish Gude, formerly senior vice president of Sprint's XOHM mobile broadband operations, is now senior vice president and chief marketing officer of Clearwire.

Clearwire's Board of Directors will initially have eight members.

Clearwire founder Craig McCaw is non-executive chairman of the board.

Along with McCaw, other directors are Dan Hesse, Sprint's chief executive officer; Keith Cowan, Sprint's president, strategy and corporate development; John Stanton, chairman and chief executive officer of Trilogy Equity Partners and former chairman and chief executive officer of VoiceStream and Western Wireless; Sean Maloney, executive vice president, chief sales and marketing officer of Intel; Frank Ianna, former president of network services for AT&T; Jose A. Collazo, former head of BT Global Services and former chairman, president and chief executive officer of Infonet Services Corporation; and Dennis Hersch, former global chairman of mergers and acquisitions for JP Morgan.

An additional five seats on the board are expected to be filled in the coming weeks.

Clearwire remains headquartered in Kirkland, WA.

It will continue to have a focused technology and east coast deployment presence in Herndon, VA.

Sprint Nextel operates two wireless networks serving nearly 51 million customers at the end of the third quarter 2008.

"In general, please keep in mind that Sprint and Clearwire have not established a partnership," Mr. Sloat said. "Sprint has merged its 4G business unit, including our 2.5 spectrum and XOHM business unit and the launched network in Baltimore, with the company formerly known as Clearwire into a new company also known as Clearwire.

"While Sprint is the majority shareholder of the new Clearwire, we own a non-controlling stake and we are separate, standalone companies with our own management teams and boards of directors," he said.