Sprint, Clearwire form WiMax venture
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Wed, 07 May 2008 12:37:01 GMT |
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NEW YORK (Reuters) - Sprint Nextel Corp and Clearwire Corp are planning a $14.5 billion venture to build a wireless high-speed Internet network based on the emerging WiMax technology.Comcast Corp , Time Warner Cable Inc , Intel Corp , Google Inc and cable operator Bright House Networks are expected to kick in $3.2 billion to help finance the venture.The deal, announced on Wednesday, will provide much needed funding for Sprint and Clearwire and allow cable providers to offer wireless services to help them compete with rivals AT&T Inc and Verizon Communications .AT&T and Verizon have been battling for market share from cable companies by offering packages of television, Internet, phone and wireless services.WiMax promises to blanket entire cities with Web access for laptops, cell phones and other wireless devices at speeds up to five times faster than traditional wireless networks but is a largely unproven technology. Wi-Fi, by contrast, is a short range service covering small areas like coffee shops.Sprint shares rose 5.5 percent in pre-market trading on Wednesday, while Clearwire shares rose 12 percent. Both companies shares had also risen the day before in anticipation of the deal.The transaction, which is expected to close in the fourth quarter this year, is based on a target price of $20 per share of Clearwire's common stock, and will also include a $10 million investment from Trilogy Equity Partners, run by veteran wireless executive John Stanton.Sprint, which had been criticized for plans to invest $5 billion by 2010 in WiMax, will own about 51 percent of the new company.Existing shareholders of Clearwire, founded by wireless pioneer Craig McCaw, will own about 27 percent. Comcast, Time Warner, Intel, Google and Bright House will get a combined 22 percent.The venture will be headed by Clearwire's current Chief Executive Benjamin Wolff, with Sprint's current Chief Technology Officer Barry West as president. It will use Sprint's existing broadcast wireless towers and its wired fiber network.Sprint, which has been bleeding customers from its existing service amid customer service problems, expects to save on costs by sharing its towers with the venture.Sprint, Comcast, Time Warner Cable and Bright House will enter wholesale agreements with Clearwire to sell high-speed wireless services using the venture's network.The cable companies recently ended an earlier joint venture with Sprint known as Pivot saying that the venture was too complicated. Under the latest agreement the cable companies will also offer Sprint's existing voice and data services on a wholesale basis.Google, for its part, is betting the venture will give traction to its Android operating system for mobile phones. Google will also be the search provider for the company's WiMax services.Intel will work with manufacturers to embed WiMax chips into its Centrino 2 processor for laptops and mobile Internet devices and will market the new company's service in association with its own brand.(Reporting by Sinead Carew and Christopher Kaufman, editing by Mark Porter and Derek Caney)
(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
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