Hesse, other Sprint Nextel execs, resign from Clearwire's board

The increasingly uneasy relationship between Sprint Nextel Corp. (S) and Clearwire Corp. (CLWR), which Sprint Nextel owns a controlling interest in, appeared to get more uneasy today as Clearwire announced that Sprint Nextel CEO Dan Hesse had resigned his position on Clearwire’s board of directors.
Following Hesse out the door on the board was Keith Cowan, president of Sprint Nextel’s strategy and corporate initiatives, and Steve Elfman, president of Sprint Nextel’s network operations and wholesale services.
Clearwire noted that it was informed by Sprint Nextel “that the decisions to resign were made out of an abundance of caution to address questions raised by Clearwire regarding new developments in antitrust law.”
Clearwire’s board includes 13 members, seven of which Sprint Nextel has the right to appoint. The remaining three four members of the board appointed by Sprint Nextel are to remain, with the carrier reserving its right to appoint three new members at a later date.
Sprint Nextel’s CFO Robert Burst, who himself is set to leave the carrier in the coming months, noted at a recent investor conference that there was some tension between Sprint Nextel and Clearwire over the retail direction of Clearwire’s Clear-branded service offering. Sprint Nextel appears in favor of Clearwire using all of its resources to build out its WiMAX network coverage that Sprint Nextel relies on for its “4G” service, while Clearwire has noted its branded offering continues to account for a vast majority of its service revenues.
Further muddying the waters between the two are expected financial requirements by Clearwire to expand its build out plans past the current 120 million potential customers covered set to be completed by the end of this year. Sprint Nextel has said it was open to helping fill that funding need, though such an investment could further tip the control balance of Clearwire in favor of Sprint Nextel, which could rankle Clearwire’s other investors and break current joint venture agreements.
To help fill that funding void, Clearwire has said it was looking at possibly selling off some of its vast spectrum assets. In addition, there have been increasing rumors that Sprint Nextel rival T-Mobile USA Inc. could step in and either take an equity stake in Clearwire or sign a wholesale agreement to offer services on Clearwire’s network to facilitate T-Mobile USA’s plans to offer next-generation services that it currently lacks the spectrum to roll out.