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WiMAX gets boost from Sprint-Clearwire venture

Posted: 09 May 2008 ?? ?Print Version ?Bookmark and Share

Keywords:WiMAX? mobile broadband? wireless Internet? 3G?

Clearwire Corp. and Sprint Nextel Corp. have entered into a definitive agreement to combine their next-generation wireless broadband businesses to form a new wireless communications company.

The new company, which will be named Clearwire, will be focused on expediting the deployment of the first nationwide mobile WiMAX network to provide a true mobile broadband experience for consumers, small businesses, medium and large enterprises, public safety organizations and educational institutions. The new company expects to enhance the speed and manner in which customers access all that the Internet has to offer at home, in the office and on the road.

Strategic investors
Sprint and Clearwire have also secured investment form Intel Corp., through Intel Capital, Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks totaling to $3.2 billion.

Upon completion of the proposed transaction, Sprint will own the largest stake in the new company with approximately 51-percent equity ownership on a fully diluted basis assuming an investment price of $20 per share. The existing Clearwire shareholders will own approximately 27 percent and the new strategic investors, as a group, will be acquiring approximately 22 percent for their investment of $3.2 billion, both on a fully diluted basis assuming an investment price of $20 per share.

"For Sprint shareholders, this is an opportunity to unlock and bring visibility to the value of our significant spectrum assets, technology and expertise, by leveraging the technology, applications and distribution strengths of our investors, who together command nearly a half- trillion dollars in market capitalization," said Dan Hesse, president and CEO of Sprint. "We've made an excellent start developing XOHM WiMAX services. Contributing those advances to a strongly backed new companyin which we'll hold the largest interestprovides Sprint with additional financial flexibility and allows Sprint management to leverage and focus on our core business.

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."

The new Clearwire expects to offer mobile wireless Internet services on a broad array of new devices that will be made possible by integrated WiMAX chipsets, scalable operating expenses and a commitment to an open architecture.

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 expects to materially reduce capital and operating expenditures by leveraging 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.

3G, 4G plans
Both companies also announced a series of commercial agreements with the strategic investors, including 3G and 4G wholesale agreements.

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.

Meanwhile, 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. The search engine giant, with the new Clearwire, will team on Internet business protocol for mobile broadband devices. The new Clearwire will support Google's Android OS 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.

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





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