Clearwire Inks 4G Prepaid Wholesale Pact

The announcement reflects Clearwires latest agreement to support other wireless providers over its high-speed network.

April 8, 2011

2 Min Read
Clearwire Inks 4G Prepaid Wholesale Pact

By Josh Long

Fourth-generation mobile services arent just reserved for subscribers with decent credit and a bank account.

Clearwire, the mobile wholesale high-speed operator, on Thursday announced an agreement that will enable Locus Telecommunications to sell 4G mobile broadband service.

Locus Telecommunications, which serves approximately 300,000 prepaid wireless customers, is expected to offer the service to its customers later this year.

The announcement reflects Clearwires latest agreement to support other wireless providers over its expanding high-speed network.

Kirkland, Wash.-based Clearwire has been embroiled in a dispute with its partner Sprint Nextel over wholesale pricing issues, casting some uncertainty over the future of a company that continues to seek out additional funding as it builds out a nationwide 4G network based on WiMAX technology.

Sprint, which partially owns Clearwire, is likely going to be asked to provide an update on the dispute during its first-quarter earnings call on Thursday, April 28. In a research note today, Deutsche Bank said analysts “may get some color regarding the status of its pricing discussions with Clearwire” as well as information in connection with Sprint’s reported plans to lease out its cellular sites and equipment to LightSquared  a company that has raised $2 billion to build a wireless broadband network based on Long Term Evolution technology. (Bloomberg BusinessWeek reported in February that LightSquared is in talks with Sprint to help speed up the development of its infrastructure at a lower cost.)  

Clearwire revealed last month that several of its senior executives were leaving the operator, including its chief executive Bill Morrow, who resigned for “personal reasons.” The company has named its chairman, John Stanton, as CEO on an interim basis.

Clearwire said the management changes were not expected to affect its progress on reaching an agreement with Sprint. The company added that such an agreement was imminent.”

In November 2008, Clearwire and Sprint announced completing a transaction to combine their next-generation wireless Internet businesses. At the time, Clearwire also disclosed that Comcast, Intel, Time Warner Cable, Google and Bright House Networks had invested $3.2 billion in the company.

As of Dec. 31, 2010, Sprint owned a 54 percent economic interest in Clearwire.

The relationship between Clearwire and Sprint is not limited to the wholesale pricing issues, and it’s possible Sprint will eventually buy out Clearwire.

Over the long term, the companies must reach “an agreement on a unified 4G build-out strategy, including spectrum, to efficiently allocate capital resources,” Fitch Ratings wrote in a special report last month. 

“This agreement, if reached, would likely include network and spectrum sharing between the two companies,” the debt ratings agency added. “In Fitch’s opinion, a failure by the two companies to strike a network sharing agreement and/or a 4G network expansion by Clearwire funded by a spectrum asset sale diminishes the likelihood that Sprint will acquire the company in the future.”

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