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Sprint chief Dan Hesse at the CTIA Wireless show last month. Source: Reuters |
Sprint Nextel (NYSE: S) has been preaching the merits of WiMAX for years, often noting that the wireless broadband technology will soon be a national reality. For just as long, however, Sprint’s ambitious WiMAX plans have failed to pan out, stymied by criticism and business difficulties.
That could all change after today, with the wireless carrier joining forces again with former partner Clearwire in a massive, $14.5 billion joint venture to create a national WiMAX carrier.
A handful of other giants in the ISP and Internet space have also signed on as backers. Those investors, who include Intel, Google, Comcast, Time Warner Cable and Bright House Networks, will pump approximately $3.2 billion into the new company.
The deal is expected to close during fourth quarter.
Once complete, the new WiMAX carrier will be known simply as Clearwire. The venture’s backers said the Clearwire WiMAX network could provide service for up to 140 million people in the U.S. by 2010.
The deal will initially value the new Clearwire at a share value of $20 per share. Sprint will hold a 51 percent stake in the entity while existing Clearwire (NASDAQ: CLWR) shareholders will own 27 percent.
Intel’s (NASDAQ: INTC) Intel Capital unit, Google (NASDAQ: GOOG), Comcast (NASDAQ: CMSCA), Time Warner Cable (NYSE: TWC) and Bright House will split the remaining 22 percent.
Sprint, Comcast, Time Warner Cable and Bright House will become the wholesale providers for the Clearwire as part of the agreement.
For Intel, the investment in Clearwire will aim to push its embedded WiMAX chips into a broad array of consumer technology devices.
For Google, the stakes are also high. The company, no stranger to WiMAX after partnering with Sprint more than a year ago, will become the default search provider for the new Clearwire WiMAX service.
Additionally, it will work with Clearwire to develop mobile WiMAX applications as well as advertising services for the new network.
Google’s participation will also be a major win for the search leader’s Android open wireless device effort. According to the companies, Clearwire will support Android on the devices that run on the WiMAX network.
Part of the impetus for the new combined entity is the simple fact that the new Clearwire will leverage the existing Sprint and Clearwire wireless infrastructure deployments. As a result, the new combined entity will have a broader geographical footprint that will reduce the overall capital that either partner would have had to invest on their own.
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