Clearwire’s latest funding round yielded gross cash of $734 million, including $402.5 million from stock sales and an additional $331.4 million from Sprint’s increased stake in the company.
After fees, the financing provided the WiMAX operator with $715.5 million in net new capital.
Clearwire’s stock sale should give it enough cash to stay afloat and begin construction of its TD-LTE network, which Sprint plans to use to beef up capacity on its own LTE network.
“This equity raise is a critical step for Clearwire to achieve its long-term business plan of creating the first wide-channel TDD-LTE 4G network in the U.S.,” Clearwire President and CEO Erik Prusch said in a statement.
The funding comes on the heels of a broad-reaching agreement between Sprint and Clearwire earlier this month that helped Clearwire avoid defaulting on a key debt payment.
As part of the $1.6 billion deal, Sprint said it would provide Clearwire with a cash infusion of up to $347 million if it was able to find outside equity funding. The most recent stock sale satisfies that commitment, Clearwire said.
Sprint, which is Clearwire’s largest shareholder, also will pay $926 million for unlimited access to its WiMAX network during 2012 and 2013. The deal offers Sprint a lower rate than its current usage-based pricing arrangement with Clearwire.
Sprint also will pitch in $350 million for Clearwire’s TD-LTE network in addition to today’s equity financing. Clearwire must meet certain deployment targets for the network by June 2013 to get the cash.
The Dec. 1 agreement between Sprint and Clearwire shows a marked improvement in their sometimes contentious relationship, which has been fraught with major disagreements about strategy and funding.
Now, Sprint and Clearwire are collaborating on the construction of the WiMAX operator’s TD-LTE overlay network. The two companies will jointly pick cell sites for the network located in high-usage areas where Sprint is likely to need additional capacity. Sprint plans to launch the first devices that can take advantage of Clearwire’s extra capacity in 2013.
Sprint plans to launch LTE in its 1.9 GHz spectrum during the second half of next year. It recently lit up its first multimode LTE base station, which runs both LTE and CDMA 1X EV-DO.
The network is expected to cover 120 million people by the end of 2012. Sprint eventually will stop selling devices running on Clearwire’s WiMAX network in favor of its own LTE gadgets but will continue to support the devices through the life of a subscriber’s contract. Sprint’s agreement with Clearwire gives Sprint access to its WiMAX network through 2015.