The long-rumored national mobile WiMAX partnership between Sprint and Clearwire is finally official, both companies said today.
Sprint will own 51% of the new company, which will be called Clearwire. Google, Intel, Comcast, Time Warner Cable and Bright House Networks combined are investing $3.2 billion, based on a $20 estimated per-share price when Clearwire opens on the NASDAQ after the deal’s expected completion later this year.
“We’ve made an excellent start developing XOHM WiMAX services. Contributing those advances to a strongly backed new company – in which we’ll hold the largest interest – provides Sprint with additional financial flexibility and allows Sprint management to leverage and focus on our core business,” said Dan Hesse, Sprint’s president and CEO, in a statement this morning.
“Additionally, the agreements allowing the new company and our cable company investors to bundle and resell Sprint’s 3G wireless services strengthen the distribution of our current services while reducing the complexity and enhancing Sprint’s cable relationships,” he said.
The deal is a once-in-a-lifetime opportunity, according to Clearwire CEO Benjamin Wolff. “Given the complexity of this transaction, we have taken the time and effort to do it right, by thoughtfully leveraging the resources and opportunities that we and our investors are bringing to the table,” he said.
Clearwire plans to reach between 120 and 140 million people in the United States by the end of 2010, officials said today. The company will use Sprint’s towers, fiber network and IT support. Other developments from the collaboration include:
- Comcast, Time Warner Cable, Bright House Networks and Clearwire will become wholesale resellers of Sprint’s 3G wireless voice and data services.
- Clearwire will support Google’s Android mobile operating system in future consumer devices.
- Google will develop Web services, advertising and applications for mobile WiMAX devices, and also will be Clearwire’s official search partner for future applications,
- Google will be the official search partner for Sprint’s mobile services.
- Google will put software such as Google Maps, Gmail and YouTube on select Sprint mobile phones.
- Intel will work with component suppliers to embed WiMAX chips into the Centrino 2-based devices such as laptops and other Internet appliances.
- Sprint, Comcast, Time Warner Cable and Bright House Networks will be wholesale network providers for Clearwire.
Godfrey Chua, an analyst with IDC, said the $3.2 billion in third-party investments combined with Sprint’s and Clearwire’s existing resources is enough to last the new Clearwire through its network rollout and testing stages. Long-term effects of multiple large companies working together could cause some ego conflicts, especially with Google as that company does not have a telecommunications background. Intel, he added, has the most to gain and will be happy as long as it’s selling more chips.
Wolff becomes CEO of the new Clearwire, with Sprint’s Chief Technology Officer Barry West serving as president. The company will be based in Kirkland, Wash., where the existing Clearwire headquarters is located. R&D will be based in Herndon, Va., where Sprint’s Nextel division is based.