By Chris Velazco
Not long after Clearwire (CLWR) announced its intent to begin lighting up a 4G LTE network, Sprint (NYSE:S) and a cabal of cable companies have begun to discuss the idea of a possible Clearwire acquisition.
Last we heard, Clearwire was waiting on $600 million in additional funding before any work on its LTE rollout could begin. Comcast (NASDAQ:CMCSA) Time Warner (NYSE:TWX), and Bright House are currently in talks with the nation’s third-largest wireless provider to get Clearwire the necessary funds to build out an LTE network.
Traction for Clearwire’s current WiMax offerings have slowed down considerably — no new WiMax markets have been lit up this year — and Verizon’s (vz) 4G network is now said to cover half of the country’s citizenry. It would appear that the tacit agreement among Sprint and Co. is that LTE is crucial to competing in the mobile space.
What’s still up in the air are the exact mechanics of this investment. BusinessWire runs though a few possibilities: the companies in question could take the direct approach and buy out Clearwire completely, while another option has the cable companies investing through Sprint. Regardless of the process, if the deal goes through, it could be a win-win for all concerned parties.
Thanks to funding from the cable companies, Sprint gets access to a more competitve 4G network which should allow it to stand on firmer footing in comparison to rivals Verizon and AT&T (NYSE:T). With Verizon moving at full steam with LTE and AT&T poised to use T-Mobile to expand its reach, Sprint needs LTE just to stay relevant.
Sprint’s stance on wholesalers would benefit cable companies in the event Sprint ends up acquiring Clearwire; while Comcast and Time Warner already resell WiMax equipment from Clearwire under their own banners, Sprint’s wholesale agreements would allow cable companies to continue doing so albeit with the latest and greatest in network tech. The bottom line: More money in everyone’s coffers.
The deal isn’t yet official, but considering what it could mean for everyone involved, expect to hear about some serious negotiations in coming weeks.