Posted on August 8, 2008 at 1:45 PM
Filed under: Corporate Strategy | Law | Trends
Tagged: AT&T , Ben Wolff , Clearwire , Craig McCaw , FCC , iDen , NII Holdings , Sprint , WiMax

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Wireless Internet provider Clearwire Corp. posted a $191.1 million loss for the second quarter due to costs related to its merger with Sprint Nextel Corp.'s WiMax business. Revenue increased 65% though, because of a rise in subscribers. Sprint just pulled back a $3 billion stock offering because "the terms being offered were not economically attractive due to unfavorable market conditions." One report says it may seek to raise cash from an outside investor to reduce its $23 billion in debt and woo back lost subscribers.

So, now more than ever, Clearwire and Sprint are banking on their $14.5 billion deal to combine their WiMax businesses. They say the deal is on track to close in the fourth quarter. What then?

Clearwire founder Craig McCaw said in May the wireless Internet venture is job one for him. CEO Ben Wolff said Clearwire is moderating sales growth to redirect resources to upgrade existing markets more fully to mobile WiMax. McCaw said he isn't worried about demand, instead focusing on delivering a product with technological validity. In his May interview with Bloomberg, McCaw noted he wanted communication between various companies in the deal to remain a priority: "If there will be one measure as to whether I've succeeded or failed in my time as chairman on this thing, it is: Did I administer regular beatings on people to put their selfish interests aside?"

McCaw seems to have it right about demand. Just looking at the mobile Web, a Juniper Research report said mobile-phone Internet use is expected to nearly triple from 577 million today to more than 1.7 billion by 2013.

However, before McCaw starts administering any beatings to the group trying to capitalize on that demand, he'll first have to fend off AT&T Inc., which is trying to block the WiMax deal.

As Business Journal reports, AT&T asked the FCC to deny the new Clearwire because its spectrum holdings, along with the combination of strategic investors, "is capable of substantially impacting competition in the mobile communications market."

In breaking Sprint news on Friday, CNBC reported Sprint may sell its iDen wireless network to either NII Holdings Inc. or private equity investors. There have also been renewed rumors about a possible takeover of Sprint by South Korea's SK Telecom Co. Ltd. More on those later on our sister blog, Dealscape. - Baz Hiralal

Clearwire's Loss Widens
Sprint May Seek Investor to Raise Funds, Analyst Says
Sprint's $3B Oops
The WiMax deal
Sprint Nextel in talks to sell iDen network: report

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