The deal lays the foundation for the deployment of Clearwire's planned LTE Advanced-ready overlay network.
operator Sprint Nextel (NYSE:S) and Clearwire (NASDAQ:CLWR) announced
agreements potentially worth up to $1.6 billion over the next four years in
payments for WiMax services, possible prepayments for Long-Term Evolution (LTE)
services and potential equity investments.
agreements modify prior wholesale pricing agreements and provide Sprint with
unlimited access to Clearwire's WiMax network to meet its growing 4G data
demands. Under the terms of the agreements, Sprint will pay Clearwire $926
million, about two-thirds of which will be paid in 2012, for unlimited 4G WiMax
retail services during 2012 and 2013. The agreements establish long-term
usage-based pricing for WiMax services in 2014 and beyond. Sprint will have
access to Clearwire's WiMax network through at least 2015. Sprint plans to
continue selling WiMax devices with two-year contracts through at least 2012
and support those devices through the life of the contract.
deal lays the foundation for the deployment of Clearwire's planned LTE
Advanced-ready overlay network and outlines the terms for Sprint to gain access
to the additional LTE capacity. The TDD-LTE rollout will capitalize on
Clearwire's spectrum resources to deliver on 4G capacity needs over the long term.
Under the terms, Sprint will pay Clearwire up to $350 million in a series of
prepayments over up to two years for LTE capacity if Clearwire achieves certain
build-out targets and network specifications by June 2013.
agreements also establish long-term usage-based pricing for LTE services for
2012 and beyond. The companies have agreed to collaborate on a network build
plan and will jointly select LTE macro-cell sites to cover Sprint's high usage
area hotspots. Clearwire plans to seek additional funding before
initiating the build-out of its LTE Advanced-ready network.
announcement further cements the mutually beneficial relationship between our
two companies," Erik Prusch, president and CEO of Clearwire, said in a
statement. "It is an important step toward meeting Clearwire's key goals
of extending our current 4G network arrangement, securing a commitment to our
future LTE Advanced-ready network, and funding the business. We continue to
move closer to realizing the full value of our deep spectrum resources as we are
uniquely positioned to meet the rapidly growing demand for 4G mobile
addition, the agreement contains separate pricing for re-wholesaling by Sprint
that is designed to provide flexibility for Sprint to grow its 4G WiMax
wholesale business while at the same time providing Clearwire with increased
pricing flexibility that could allow the company to grow its wholesale markets
and attract new customers.
agreements are a result of the technical MOU [memorandum of understanding] we
outlined during our third quarter results call and extend our relationship with
Clearwire," Sprint CEO Dan Hesse said in a statement. "It provides
Sprint improved pricing, allows us to continue to provide WiMax 4G services to
our customers today and to new customers in the future, and provides additional
LTE capacity to help complement our Network Vision strategy and meet our
customers' growing data demands."
and Sprint said they also plan to work collaboratively to support the ecosystem
for TDD-LTE in Band Class 41 for devices, chipsets and standards. Subject to
the timing of the build-out and other factors, Sprint expects to launch devices
including laptop cards and phones that will utilize Clearwire's TDD-LTE network