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Semiconductor industry

Sprint and Partners to Pump $1.5 Billion into Troubled Clearwire Corp.

Strategic Insights

— 1 min read

Sprint Nextel Corp., along with its joint venture partners, is preparing to inject an additional $1.5 billion into Clearwire Corp., a wireless broadband firm struggling to build out its next-generation network. The investment, worth at least $1.5 billion, comes after a previous $3.2 billion deal in 2011. Clearwire's majority shareholder, Sprint, has tied its own success to the success of Clearwire's high-speed data transmissions. The funding is aimed at helping Clearwire complete its 4G mobile broadband network, which is based on WiMax technology promoted by Intel.

Key Takeaways:

  • Sprint and its partners, including Comcast, Intel, Time Warner Cable, and Bright House Networks, will invest a total of $1.5 billion in Clearwire, with Sprint contributing $1 billion and the joint venture partners contributing $500 million.
  • The investment comes approximately 18 months after the initial $3.2 billion deal in 2011, which gave Sprint and other partners a significant ownership stake in Clearwire.
  • Clearwire has struggled to attract new capital, with recent efforts to partner with other telecom companies, such as Deutsche Telekom AG, falling through.
  • Sprint has hired bankers to help raise money for the Clearwire investment and will either use its own cash pile or raise new debt to cover the $1 billion investment.
  • Clearwire's second-quarter loss was $241.4 million, and the company has about 2,100 employees and 511,000 phone and Internet subscribers in the United States.

Statistics:

  • Clearwire's $1.5 billion funding round is at least 46% larger than the initial $3.2 billion deal in 2011.
  • Sprint will contribute $1 billion, or 66.7% of the total investment.
  • Smartphones with 3G technology offered by rivals AT&T Inc. and Verizon Wireless have been adopted by some consumers.
  • Clearwire has 2,100 employees.
  • The company has 511,000 phone and Internet subscribers in the United States.

Sources:

  • Two people familiar with the matter
  • Sprints Nextel Corp.
  • Clearwire Corp.
  • Comcast Corp.
  • Intel Corp.
  • Time Warner Cable Inc.
  • Bright House Networks LLC

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