Wednesday, May 07, 2008

Clearwire, Sprint Nextel to merge wireless units

KIRKLAND, Wash. — Clearwire and Sprint Nextel are planning to merge their wireless broadband units to create a new $14.55-billion (U.S.) wireless 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 per cent stake in the new venture.

Sprint Nextel Corp. will be majority owner with a 51 per cent equity stake, while existing Clearwire shareholders will receive about 27 per cent 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.

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.

The deal, which has been approved by the boards of all companies involved, is expected to close during the fourth quarter.