Sprint Nextel Corp. and Clearwire Corp. are
combining their WiMax businesses, creating a new mobile broadband company to be named Clearwire. And the new company is getting a $3.2 billion cash infusion from an impressive alliance of technology and cable giants including Intel Corp. (through Intel Capital), Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks. Sprint and Clearwire shareholders will own 51% and 27%, respectively, of the new WiMax business.
WiMax is a broadband technology that facilitates ultra-fast Web access, and the new Clearwire hopes to have between 120 million and 140 million customers in the U.S. on its WiMax network by the end of 2010. Alliances members will collaborate on a range of R&D, deployment and sales fronts. For instance:
- Google will partner with the new Clearwire in the development of Internet services, advertising services and applications for mobile WiMax devices.
- Comcast, Time Warner Cable, Bright House Networks and the new Clearwire will enter into 3G wholesale agreements with Sprint, becoming bundled providers of Sprint's wireless voice and data services.
- Google will become the default provider of Web and local search services for Sprint's mobile devices, and Sprint will preload several Google services, including Google Maps for mobile, Gmail and YouTube on select mobile phones.
- Google and Intel have options to enter into 3G and 4G wholesale agreements with Clearwire and Sprint, respectively.
In addition to spectrum, Sprint will contribute certain hardware, software and all of its WiMax-based trademarks and other WiMax-related intellectual property to the new venture, which will be led by Clearwire chief executive Benjamin G. Wolff. Sprint's chief technology officer, Barry West, will serve as president.
This is a pivotal deal for Sprint, whose CEO Dan Hesse has been under pressure to revive the company's battered cell-phone business ever since he
took over from Gary Forsee in December. It's an expensive gamble on a technology unproved in the marketplace, but the WiMax deal may give Sprint an advantage over rivals AT&T Inc. and Verizon Wireless should WiMax take off.
The transaction is expected to close in the fourth quarter. Among other
closing criteria, it will need approval from the Federal
Communications Commission and clearance under the Hart-Scott-Rodino Act.
More analysis will come from Tech Confidential, TheDeal.com and CD. -
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