Clearwire on WiMax vs. LTE: What War?

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 |  Includes: BDH, CMCSA, S, TWC, WMH
by: Judy Weil

From Clearwire Corp.'s (CLWR) Business Update call:

For better or for worse, Clearwire says it is a stand-alone company. Which means it won’t necessarily fail if their partners fail, but it may not necessarily expect any future help from them either:

Last Friday we received a $3.2 billion cash investment from… technology and media companies including Comcast, Intel, Time Warner Cable, Google, and Bright House Networks.

Unlike most joint ventures Clearwire is independent from its major corporate shareholders.

While we expect these shareholders to be important commercial partners they do not have the ability to direct the activities of the company nor is their approval required to undertake major business initiatives such as where or when we build our network or future capital raising activities.

As part of the transaction Sprint (NYSE:S), Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC), and Bright House are each expected to become significant wholesale customers of Clearwire… Each of these parties have said they intend to resell our services under their own brands.

Full steam ahead, although in an interview after this conference call Clearwire CEO Ben Wolff announced that the company will likely slow its buildout.

Note that Clearwire shares closed at $5.18 on Wednesday.

Both the acquisition of Sprint’s assets and the $3.2 billion investment were completed on the terms previously announced back in May of this year. No material changes were made to the transaction or commercial agreements between the time that we signed the agreement this past May and last Friday.

This means that the new investment was made at an initial price of $20.00 per share subject to an adjustment that will be made approximately 90 days from now to somewhere between $17.00 and $23.00 per share, depending on the average trading price of our stock at that time.

In no event will the price paid per share by our new corporate investors be lower then $17.00 per share nor higher then $23.00.

The Unstrung article linked to above found Clearwire has been advertising job searches for network implementation staff in over 40 states:

Clearwire currently operates pre-WiMAX networks in 46 US markets. We plan to upgrade most of these markets to mobile WiMAX technology in 2009.

There is no WiMax-LTE “technology war”:

Mobile WiMax and LTE have a lot in common. Far more in common in fact then either of these technologies have with today’s 2G and 3G technologies.

Our vendors will be able to deliver network infrastructure equipment to us that will enable us to operate both mobile WiMAX and LTE technologies if we decide that it makes sense to do so several years from now when LTE becomes commercially available.

The 4G technology choice for wireless network operators like ourselves is nothing like the format battles that we witnessed between VHS and Betamax.

Spectrum resources are the crown jewels of the wireless business and Clearwire now has an unprecedented depth of spectrum available for 4G. We now hold more than 42 billion MHz [inaudible] of spectrum, more then twice the amount of spectrum that was sold at auction earlier this year for almost $20 billion.

If LTE truly becomes established as a global standard as WiMAX has, Clearwire will be well positioned to take advantage of that opportunity as well given our significant spectrum resources.