Could Sprint Nextel Corp. (S) be readying a new infusion of cash into Clearwire Corp. (CLWR)?
According to a report in the Wall Street Journal, Sprint Nextel’s board of directors expects to make a “substantial” investment in Clearwire.
Clearwire reported last week that it was looking to begin rolling out LTE services across its current footprint, but that it would need around $600 million in funding to do so. Those network plans are not expected to include Sprint Nextel’s Network Vision initiative, which is set to cost the carrier around $5 billion, though there is talk Clearwire could tap into that plan if it wanted to expand network coverage beyond its current footprint of around 128 million potential customers covered.
Despite Sprint Nextel’s continued stake in Clearwire, there has been concern that the relationship could be growing cold. Sprint Nextel recently reduced its voting stake in Clearwire to less than 50%, though many thought that was done to lessen concern from potential outside investors that Clearwire was too close to Sprint Nextel.
There was also some concern that Sprint Nextel’s recent spectrum hosting deal signed with LightSquared, which like Clearwire is looking to make ground as a wholesale network provider, could de-emphasize Clearwire in Sprint Nextel’s future plans. The LightSquared deal, which is dependent on the company clearing up its current spectrum interference issues with the GPS community, would see Sprint Nextel paid $9 billion over an 11 year period as well as provided with $4.5 billion in credits for LTE and satellite wholesale usage. Sprint Nextel will also have the option to purchase up to 50% of LightSquared’s L-band capacity.
Jennifer Fritzsche, senior analyst at Wells Fargo Securities L.L.C., noted that Clearwire remains an important part of Sprint Nextel’s future.
“We believe that the street has become pessimistic on the possibility of Sprint continuing to support Clearwire,” Fritzsche said. “As we have continued to say, we believe that [Clearwire] is an important partner for Sprint. It seems based on this report some of the [Sprint Nextel] board shares this view.”
Sprint Nextel’s management has repeatedly said that it’s 4G future was tied to Clearwire, which has a deep spectrum portfolio in the 2.5 GHz band. Clearwire currently offers WiMAX services across its network, which is the basis for Sprint Nextel’s “4G” offering.
Sprint Nextel was expected to provide more details on its Network Vision plans during its second quarter conference call last month, but instead postponed the update until later this year pending potential new additions to the deal.
Clearwire recently named former COO Erik Prusch as its new CEO, taking over the position from industry veteran John Stanton.
Bored? Why not follow me on Twitter.
