Clearwire auctioning spectrum to fuel development

Clearwire Corp., the company behind WiMAX 4G wireless, is trying to raise up to $5 billion to fuel their future expansion. They are rumored to be in talks with Verizon, Time Warner Cable, Cablevision, Deutsche Telecom AG, and Sprint (Clearwire's majority owner).

No party offered any official comment on the auction, as the matter hasn't become public. Clearwire is trying to raise the capital by selling up to 40 megahertz of spectrum per market. John Hodulik, an analyst with UBS AG, says that Clearwire will need at least $2 billion this quarter to fund their network expansion.

We have heard talk recently about T-Mobile, a Deutsche Telekom property, considering adopting Clearwire's WiMAX. However, those rumors were dispelled when T-Mobile's chief networking officer stated that WiMAX is "a niche play," and that they would wait for LTE. Verizon and AT&T are also committed to their upcoming LTE networks.

The UBS analyst still asserts that this auction could have a significant impact: "There are big ramifications from this from a funding standpoint...If they get $5 billion, they could fund the business without raising any extra capital." While T-Mobile may have labeled WiMAX as a "niche play," this auction might change the future landscape of WiMAX vs. LTE services.

Clearwire raised capital in a similar manner with Sprint in 2009. They gained $1.56 billion from Sprint, as well as other investors like Google, Time Warner Cable, and Comcast. Their 4G service is estimated to reach 120 million customers by year's end.

source: Bloomberg via Phone Scoop