Tuesday, May 6, 2008

The New Clearwire Outlines Plans for Nationwide Mobile WiMAX

Clearwire and Sprint Nextel confirmed plans to combine their next-generation wireless broadband businesses to form a new wireless communications company with a nationwide mobile WiMAX network. Sprint will own the largest stake in the new company with approximately 51 percent equity. The existing Clearwire shareholders will own approximately 27 percent and new investors, including Intel, Google, Comcast, Time Warner Cable and Bright House Networks, will contribute $3.2 billion into the new company to acquire a 22 percent stake.


The company believes it will have a time-to-market advantage over competitors in fourth-generation services, supported by strong spectrum holdings and a national footprint. Further, it will build on the strong foundation of Clearwire's existing subscriber base of nearly 400,000 wireless broadband customers as of year-end 2007, as well as Sprint's continued XOHM WiMAX network build-out in certain markets throughout this year.


Some highlights of the deal:

  • The name of the new company will be called Clearwire and it will apply for listing of its common stock on the NASDAQ under the ticker "CLWR." Benjamin G. Wolff, currently CEO of Clearwire, will serve as the new company's CEO and Barry West, currently Sprint's Chief Technology Officer and XOHM business unit leader, will be president. The company will be based in Kirkland, Washington and have R&D in Herndon, Virginia.


  • The new Clearwire is targeting a network deployment that will cover between 120 million and 140 million people in the U.S. by the end of 2010.


  • Sprint will contribute all of its 2.5 GHz spectrum and its WiMAX-related assets into a subsidiary of the new company. The implied equity valuation of Sprint's contribution is approximately $7.4 billion. In addition to spectrum, Sprint will contribute to the new Clearwire certain hardware, software and all of its WiMAX-based trademarks and other WiMAX-related intellectual property.


  • The new Clearwire will leverage Sprint's existing infrastructure, reducing the cost of building out the mobile WiMAX network nationwide. The new Clearwire expects to utilize Sprint's towers, fiber network and IT support at favorable bulk rates. Sprint also will realize cost savings for its core business by sharing certain costs of towers and other infrastructure.


  • Intel will work with manufacturers to embed WiMAX chips into Intel Centrino 2 processor technology-based laptops and other Intel-based mobile Internet devices, and will market the new company's service in association with Intel's performance notebook PC brand.


  • Google will partner with the new Clearwire in the development of Internet services, advertising services and applications for mobile WiMAX devices. In addition, Google will be the search provider and a preferred provider of other applications for the new Clearwire's retail product.


  • Google will partner with the new Clearwire on an open Internet business protocol for mobile broadband devices. The new Clearwire will support Google's Android operating system software in its future voice and data devices that it provides to its retail customers.


  • Sprint, Comcast, Time Warner Cable, and Bright House Networks will enter into wholesale agreements with the new Clearwire, becoming 4G providers of new Clearwire's mobile WiMAX service.


  • Comcast, Time Warner Cable, and Bright House Networks and, after completion of the transactions, the new Clearwire, will enter into 3G wholesale agreements with Sprint, becoming bundled providers of Sprint's wireless voice and data services, expanding the reach of Sprint's network to more customers, while providing the cable companies a simpler, more effective vehicle to bundle wireless services.


  • Sprint and Google have also entered into an agreement related to Sprint's mobile services, whereby Google will become the default provider of web and local search services, both of which will be enabled with location information, for Sprint. Sprint will also preload several Google services - including Google Maps for mobile, Gmail and YouTube - on select mobile phones and provide easier access to other Google services.


  • Google and Intel have options to enter into 3G and 4G wholesale agreements with Clearwire and Sprint respectively and have no current plans to do so.


Clearwire Chairman Craig O. McCaw, said, "The power of the mobile Internet, which offers speed and mobility, home and away, on any device or screen, will fundamentally transform the communications landscape in our country. We believe that the new Clearwire will operate one of the fastest and most capable broadband wireless networks ever conceived, giving us the opportunity to return the U.S. to a leadership position in the global wireless industry."http://www.sprint.comhttp://www.clearwire.com

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