Clearwire has sold $1.3 billion in debt, in efforts to secure funding for continuing the build-out of its WiMax-based 4G network.
Clearwire, working to secure funding to continue the build-out of
its WiMax-based 4G network, sold more than $1.3 billion in debt, the
company announced in a Dec. 6 statement
Clearwire, which wireless carrier Sprint owns a majority stake in,
has said it plans to cover 68 U.S. markets and 120 million people by
year's end. However, even after this latest sale, reports Reuters UK,
it still needs "billions of dollars more funding" to complete
construction on the network.
In a Dec. 3 talk at the JP Morgan SMid Cap Conference, Clearwire CFO
Eik Prusch said that while the financing, composed of three parts - a
first lien of $175 million, a second lien of $500 million and a $650
million sale of 8.25 percent exchangeable notes due in 2040 - totaled
approximately $1.3 billion, "the follow-on could be as much as $880
Prusch added that Clearwire is still searching of money to continue
the build-out, and that the company has "always expected some
combination of deals, and this satisfies one of the deals." To save
money, he said Clearwire has cut back on its number of contractors,
delayed deployments in Denver and Miami and deferred the launch of some
After a USB investor conference, Prusch told reporters that
Clearwire is halfway through its spectrum auction and is looking to
find "up to $2 billion from a sale," UK Reuters
reported Dec. 6, though it's still not clear whether Clearwire will look for equity funding and a spectrum sale.
"The question is whether we close either or both," he said, according to UK Reuters.
While Clearwire, and with it Sprint, have been first out of the gate with 4G, Verizon joined the race Dec. 5,
with the launch of 38 metropolitan markets and 60 commercial airports.
By the end of 2012, it plans to offer 4G LTE (long-term evolution)
technology across its entire 3G footprint.
"We have a $20 billion annual wireless business," Verizon CFO John
Killian said during the carrier's third-quarter earnings call. "It's
hard to describe that as 'early innings,' but we still believe it's the
early innings of the data explosion."
T-Mobile is also getting in on the explosion. Though its network is
based on HSPA+ technology, and not yet LTE, executives say the network
offers comparable speeds and on Nov. 2 launched an ad campaign calling
itself "America's largest 4G network," as well as launching the 4G-enabled myTouch 4G smartphone
Though Sprint has somewhat distanced itself from the struggling
Clearwire, its 4G offering through the company has helped the carrier
to post some of its best quarters in years. "We are in a
hyper-competitive industry, with strong, capable competitors, so making
progress is hard work," Sprint CEO Dan Hesse said during an Oct. 27
earnings call. "But we intend to persevere."
The message appears to be the same one coming from Clearwire executives.
"We're comfortable about where we're going to be at the end of the
year," Clearwire's Prusch said at the JP Morgan event. "Certainly this
gives us plenty of new flexibility."