Clearwire, Sprint Nextel to Form $14.55B Wireless Company
Clearwire and Sprint Nextel will combine their wireless broadband
units to create a $14.55 billion communications company.
The new
company, to be named Clearwire, will receive a $3.2 billion investment
from Intel Corp., Google Inc., Comcast Corp., Time Warner Cable Inc.
and Bright House Networks. The investment is based on a target price of
$20 per Clearwire share and will give the companies a 22 percent stake
in the new venture.
Overland Park, Kan.-based Sprint Nextel
Corp. will be majority owner with a 51 percent equity stake, while
existing Clearwire shareholders will receive about 27 percent
interest.
Clearwire, which will concentrate on rolling out a
mobile network based on the emerging WiMAX standard, will also receive
an investment from Trilogy Equity Partners, led by U.S. wireless
industry veteran John Stanton.
WiMAX promises faster download
speeds than the latest networks run by cell-phone operators, and
it’s even seen as a potential competitor to fixed-line
broadband.
Rivals such as AT&T Inc. and Verizon Wireless
have eschewed WiMax, opting instead for upgrades to their current
wireless broadband networks and a future technology called Long Term
Evolution.
Clearwire already provides wireless Internet service
in some parts of the country, using a WiMax-like technology. The
company had a subscriber base of nearly 400,000 wireless broadband
customers at the end of 2007.
The new company is looking for a
U.S. network deployment between 120 million and 140 million people by
the end of 2010.
Sprint and Clearwire, a startup founded by
cellular pioneer Craig McCaw, had already announced their plans to
build out networks using WiMAX technology, but had been looking for
outside funding.
The new company will be led by Clearwire Chief
Executive Benjamin Wolff, with Sprint Chief Technology Officer Barry
West serving as president. West also leads Sprint’s XOHM
division.
The Kirkland, Wash.-based venture will house workers
from Clearwire and Sprint’s XOHM unit and will have research and
development and other operations located in Herndon, Va. Its board will
consist of 13 members at the start. Sprint will name seven of them,
which will include at least one independent director. The investor
group will name four members, including one independent. Eagle River, a
private investment company controlled by wireless veteran Craig McCaw,
will name one member, with the remaining independent member selected by
Clearwire’s nominating committee.
McCaw is expected to
serve as non-executive chairman. Other anticipated board members
include Sprint President and CEO Dan Hesse, Comcast Chairman and CEO
Brian Roberts, Time Warner Cable President and CEO Glen Britt and
Stanton.
The deal, which has been approved by the boards of all
companies involved, is expected to close during the fourth quarter. The
company will apply for a Nasdaq listing under the ticker
“CLWR.”
Clearwire shares jumped 7.4 percent, or $1.22,
to $17.68 at the open of trade. Sprint shares rose 4.5 percent, or 41
cents, to $9.60.
Next:Yahoo’s Next Move
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