Report: Clearwire getting additional $1.5B in funding
When we heard Clearwire’s Hope Cochran was a no-show at last week’s Open Mobile Summit due to a last-minute trip to New York, we knew something was up — and since Cochran is Clearwire’s senior VP for finance and treasury, it (apparently) had something to do with money talks, specifically the kind that helps you keep building those costly consumer wireless networks.
On Sunday the Wall Street Journal was reporting that Sprint, Intel, Comcast and others will soon be investing another $1.5 billion in the builder of a nascent national WiMAX wireless network, which recently launched services in Chicago, Dallas and Philadelphia. As Om notes, the cash infusion shouldn’t come as a surprise, especially since Clearwire CEO Bill Morrow has been pretty open about his company’s need for more working capital — and likewise, Sprint CEO Dan Hesse has been open about his company’s willingness to double down on its Clearwire investment.
If and when the deal goes through — remember Clearwire reports third-quarter earnings on Tuesday, so a good time to make such announcements — we’ll no doubt hear more about the state of Clearwire’s overall finances, cash burns, etc. While we think they may have more running room in the race against LTE than others do, from an investor standpoint it still looks from here like Clearwire is a safe venture, especially when looked at through a spectrum and core-network buildout point.
On the spectrum side, Clearwire’s holdings in the 2.5 GHz band currently dwarf the 700 MHz holdings of the big telcos, AT&T and Verizon — by about a factor of four to six times the spectrum depth, on average, in the biggest U.S. markets. While you can debate the merits of 700 MHz vs. 2.5 GHz, from a pure bandwith throughput perspective the Clearwire holdings are a bit of a wireless gold mine, one that may yet pay off handsomely for Craig McCaw and company. Whether Clearwire builds the network out itself and is a success financially — or whether it ends up renting out some spectrum to others, like T-Mobile — like Manhattan real estate, someone is going to pay for the bandwidth under Clearwire’s purview.
And from an acquisition standpoint, buying Clearwire could be an easy congestion-reliever for telcos who may find themselves out of running room in a few years. Even if a buyer wanted to rip and replace Clearwire’s WiMAX network with Long Term Evolution (LTE) technology on the radio end, that buyer would still be likely able to use Clearwire’s IP-based core network and backhaul without too many changes.
So is it bad money after good, or a good time to add to a winning bet? While we have long said that the spectrum makes Clearwire an even money bet, the problems for big telcos caused by the booming demand for mobile broadband seems to make Clearwire worth more, not less, these days.
Related posts:
Loading ...
