Sprint inks a new deal with Clearwire for WiMAX, LTE network accessAlex Wagner - Deputy Managing Editor, News Desk
Ever since Sprint announced its plans to make the jump to LTE, customers toting around WiMAX-enabled devices have been wondering what the future holds for Sprint's original 4G network. That future has become a bit more clear today, as Sprint and Clearwire have announced a deal that'll extend Sprint's access to Clearwire's WiMAX network and will also lay out the framework for Clearwire to build out an LTE network which Sprint will have some access to. On the WiMAX side of things, Sprint has agreed to pay Clearwire $926 million for unlimited WiMAX access through 2012 and 2013, and Sprint will continue to have access to the WiMAX network through at least 2015 thanks to the agreements. Sprint says that it'll continue to sell WiMAX devices with contracts through 2012 and will support those products through the life of their contracts.
Switching over the LTE, Sprint has said that it'll be forking over up to $350 million to Clearwire to aid in the company's move to LTE as long as Clearwire meets certain build-out targets by June 2013. The two companies have agreed to work together on a network build plan, and Sprint expects to begin selling laptop cards and phones capable of accessing Clearwire's LTE network in 2013. It's also worth mentioning that this entire deal has helped Clearwire make interest payments of $237 million total that were due today.
Overall it sounds like a pretty good deal for both Sprint and Clearwire. Although we didn't exactly expect Sprint to just suddenly drop support for its WiMAX devices as soon as it switched to LTE, it's good to hear that this deal will provide Sprint with access to WiMAX (and support for Sprint WiMAX customers) for the next several years. And looking forward to LTE, Sprint seems to be doing a nice job of preparing to offer LTE services. Not only does it have this latest agreement with Clearwire, but Sprint also has its own LTE roll out plans and an agreement with LightSquared to help the LTE build-out. Unfortunately, we've still got a while to wait before the first Sprint LTE networks go live, as the carrier has said that it'll be flipping the initial LTE switches in the middle of next year. Good thing we've got the press release below to help pass the time until then.
Sprint and Clearwire Announce New Agreements
Dec 1, 2011 (GlobeNewswire via COMTEX) --
-- Offers Clearwire Up to $1.6 Billion in Conditional Aggregate Revenues and Funding
-- Clearwire to Receive Total of $926 Million From Sprint for Unlimited 4G WiMAX Services in 2012 and 2013; WiMAX Network to Operate Through at Least 2015
-- Sprint to Provide Support for Future LTE Services
-- Companies Agree on Parameters for Additional Sprint Equity Investment
-- Clearwire to Pay $237 Million Total Interest for First-Priority, Second-Priority and Exchangeable Notes as Scheduled
OVERLAND PARK, Kan. and BELLEVUE, Wash., Dec. 1, 2011 (GLOBE NEWSWIRE) -- Sprint Nextel S +1.85% and Clearwire CLWR +23.60% today announced agreements potentially worth up to $1.6 billion over the next four years in payments for WiMAX services, possible pre-payments for LTE services and potential equity investments. The agreements further align Clearwire's LTE network build as a complement to Sprint's Network Vision strategy.
Also today, Clearwire announced that it has made interest payments totaling $237 million on its first-priority, second-priority and exchangeable notes which were due Dec. 1, 2011.
"These agreements are a result of the technical MOU we outlined during our third quarter results call and extend our relationship with Clearwire," said Dan Hesse, Sprint CEO. "It provides Sprint improved pricing, allows us to continue to provide WiMAX 4G services to our customers today and to new customers in the future and provides additional LTE capacity to help complement our Network Vision strategy and meet our customers' growing data demands."
"Today's announcement further cements the mutually beneficial relationship between our two companies," said Erik Prusch, president and CEO of Clearwire. "It is an important step toward meeting Clearwire's key goals of extending our current 4G network arrangement, securing a commitment to our future LTE Advanced-ready network, and funding the business. We continue to move closer to realizing the full value of our deep spectrum resources as we are uniquely positioned to meet the rapidly growing demand for 4G mobile broadband."
Wholesale Pricing and 4G Availability
The agreements modify prior wholesale pricing agreements and provide Sprint with unlimited access to Clearwire's WiMAX network to meet its growing 4G data demands. Under the terms of the agreements, Sprint will pay Clearwire a total of $926 million, approximately two-thirds of which will be paid in 2012, for unlimited 4G WiMAX retail services during 2012 and 2013, subject to certain conditions. The agreements also establish long-term usage-based pricing for WiMAX services in 2014 and beyond. Sprint will have access to Clearwire's WiMAX network through at least 2015. Sprint plans to continue selling WiMAX devices with two-year contracts through at least 2012 and support those devices through the life of the contract.
In addition, the agreement contains separate, competitive pricing for re-wholesaling by Sprint that provides flexibility for Sprint to grow its 4G WiMAX wholesale business while at the same time providing Clearwire increased pricing flexibility that should allow Clearwire to grow its wholesale markets and attract new customers.
The agreements also lay the foundation for the deployment of Clearwire's planned LTE Advanced-ready overlay network and outline the terms for Sprint to gain access to the additional LTE capacity. The TDD-LTE rollout will capitalize on Clearwire's deep spectrum resources to deliver on 4G capacity needs over the long-term. Under the terms, Sprint will pay Clearwire up to $350 million in a series of prepayments over a period of up to two years for LTE capacity if Clearwire achieves certain build-out targets and network specifications by June 2013. The agreements also establish long-term usage-based pricing for LTE services for 2012 and beyond. The companies have agreed to collaborate on a network build plan and will jointly select LTE macro-cell sites to cover Sprint's high usage area "hotspots." Clearwire plans to seek additional funding before initiating the build-out of its LTE Advanced-ready network.
In addition, Clearwire and Sprint will work collaboratively to support the ecosystem for TDD-LTE in Band Class 41 for devices, chipsets and standards. Subject to the timing of the build-out and other factors, Sprint expects to launch devices including laptop cards and phones that will utilize Clearwire's TDD-LTE network in 2013.
Sprint has committed to providing additional equity funding to Clearwire in the event of an equity offering. If Clearwire raises new equity between $400 and $700 million, Sprint will participate in the offering on a pro rata basis up to $347 million, consistent with Sprint's current voting interest of 49.6 percent on the same terms and conditions as other participating companies.
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 53 million customers at the end of 3Q 2011 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. Newsweek ranked Sprint No. 3 in its 2011 Green Rankings, listing it as one of the nation's greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint .
Clearwire Corporation CLWR +23.60% , through its operating subsidiaries, is a leading provider of mobile broadband services. Clearwire's 4G network currently provides coverage in areas of the U.S. where more than 130 million people live. Clearwire's open all-IP network, combined with significant spectrum holdings, provides an unprecedented combination of speed and mobility to deliver next generation broadband access. The company markets its 4G service through its own brand called CLEAR(R) as well as through its wholesale relationships with companies such as Sprint, Comcast, Time Warner Cable, Locus Telecommunications, Cbeyond, Mitel, Best Buy and United Online. Strategic investors include Intel Capital, Comcast, Sprint, Google, Time Warner Cable, and Bright House Networks. Clearwire is headquartered in Bellevue, Wash. Additional information is available at http://www.clearwire.com.
Via Phone Scoop