Sprint seeks full Clearwire control via cablecos
Key shareholders in the 4G venture reported to consider various scenarios to fund LTE roll-out
Published: 22 August, 2011
READ MORE: M&A | US | Clearwire | Cable | LTE
Sprint is reported to be negotiating with its cableco partners about raising more money to support Clearwire's LTE migration, and increasing its own control of the venture. While this is the most logical 4G path for the cellco, given its huge investment to date in Clearwire's network and spectrum, it has recently looked to be going cold on its original 4G outfit. It has signed a network sharing deal which gives it access to LightSquared's rival wholesale 4G network, and has repeatedly dithered on its final LTE plans.
While its plans remain cloudy and often counter-intuitive Verizon Wireless continues to race ahead with a highly focused and intelligible LTE strategy. Sprint has appeared to be planning to rely on a brand new build within its Network Vision infrastructure, and on the future of LightSquared (itself beset by doubts because of GPS interference), and turning its back on an established revenue stream with a huge spectrum advantage. Now it may have seen sense, and is said to be in talks with the three cable operators which also invest in Clearwire and use its networks on an MVNO basis - Comcast, Time Warner Cable and Brighthouse Networks.
Between them, the firms could raise the $600m or so that Clearwire needs for its initial transition to a dual-mode WiMAX/TD-LTE network (though the next step of the plan, full transition and an early upgrade to LTE Advanced, would require significantly more money). So far, Clearwire has insisted it could pursue the strategy using its own infrastructure and independently of Sprint, but in reality, it would save a great deal of cost by integrating with Network Vision - and it certainly needs Sprint's custom to survive.
According to Bloomberg, a direct increase of investment in Clearwire is not the most likely scenario. Instead, the cellco is said to favor the cable firms taking stakes in Sprint itself, so that the latter can achieve a full buy-out of Clearwire. That would integrate Network Vision and Clearwire's networks, and also merge the cable firms' separate alliances with Sprint - the MVNO deal for CDMA services, and the data-focused agreement based on WiMAX. A fourth cableco, Cox, has a CDMA pact with Sprint but stayed out of Clearwire, originally aiming to build its own 3G network. It recently pulled away from that plan and could now seek a broader alliance with Sprint/Clearwire.
While a full buyout of Clearwire by Sprint seems the most likely end game, some insiders whisper that the cablecos themselves want to acquire Clearwire, giving them greater control of their wireless and quad play agendas. However the deal is structured, it is important for Sprint that an effective wholesale 4G network is created, with itself in a guiding role - even if that stops short of full ownership. The firm has already argued that, in its current form, it will not survive the planned acquisition of T-Mobile by AT&T.
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