Sprint poised to pay Clearwire up to $1.6 billion, preventing it from a fallout

Sprint poised to pay Clearwire up to $1.6 billion, preventing it from a fallout
Sprint will be doling out up to $1.6 billion to Clearwire during the next four years, solving the cash crunch of its WiMAX supplier. Thus Clearwire will be able to meet its $237 million interest payment due today, said the company.

Things were looking dreary in November, when Clear announced it will miss the payment, potentially facing penalties from creditors and spiking borrowing costs afterwards. The company needs the money just to operate, but it also has to go ahead with its network upgrade plans.

Sprint, which is a majority owner, and Clearwire's biggest customer at the same time, looks to expand its stake and the current network agreement against its money. If Clearwire goes to the markets for additional $400-$700 million, Sprint will be a part of it as well, up to its $347 million right, based on the stake it holds.

The carrier will also give Clearwire $926 million for network usage in the next two years, and Clear will support it until 2015, when the last contract of Sprint's WiMAX phones will expire. Moreover, Sprint will pay up to $350 million over two years for LTE from Clear, if build-out milestones are met by June 2013. The companies plan to introduce the first data cards and smartphones with LTE connectivity in 2013.

Sprint will have a lot on its plate in the near future - the iPhone bet, maintaining its WiMAX network supplied by the troubled Clearwire, and looking to switch to its LTE at the same time, not to mention phasing the Nextel merger - so hopefully all will end well.

source: Reuters

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14 Comments

1. remixfa

Posts: 14605; Member since: Dec 19, 2008

umm.. where is sprint getting all this money? They must have one heck of a credit card bill.. lol

2. arcq12

Posts: 733; Member since: Oct 13, 2011

yeah that's the reason why VZW doesnt wanna acquire Sprint.. they have tons and tons of debt..

5. rendHELL

Posts: 304; Member since: Nov 09, 2011

hahah... careful there... many people will be out jobs...

6. rendHELL

Posts: 304; Member since: Nov 09, 2011

credit card of dan hesse

12. TheInfamousCJ

Posts: 20; Member since: Nov 24, 2011

All I can do is smh @ Sprint they are doing their best to stay competitive and profitable. My only query is why invest in wimax, invest in clearwire, and then decide to go LTE when wimax 2 is an available technology and it doesnt hurt your business relationship with clearwire.

3. scvzw2

Posts: 32; Member since: Jun 20, 2010

Sprint is self destructing in 5.....4.......3.....2......

4. rendHELL

Posts: 304; Member since: Nov 09, 2011

wow.... tons of cash...

7. GALAXY-S

Posts: 701; Member since: Jun 07, 2011

holy crap that means no raise for us sprint employees for a very long time !

8. ledbetterp3

Posts: 467; Member since: Aug 31, 2011

I don't think Sprint will be releasing LTE very soon, and if they do, it won't be expanded too much. At least for awhile...

9. arcq12

Posts: 733; Member since: Oct 13, 2011

I believe Sprint will do launch their LTE network late Q1 or Q2. And they will expand it more aggressively than how they expanded WiMax.. they are planning to switch to LTE in the first place thats why they didnt bother expanding their WiMax network anymore.. i know Sprint sucks but believe it or not, they have their word.

10. theoak

Posts: 324; Member since: Nov 16, 2011

CLEAR is looking to skip "LTE" also ... and wants to deploy LTE Advanced instead. So I wonder how this will play into Sprint's plans. I suppose they could always sell USB sticks. Sprint, like it or not, I think is being forced to work with CLEAR because the LightSquared deal is on hold, so Sprint has to do something to remain competitive, and right now, CLEAR is all they have. I am a CLEAR home user for phone and internet. I CAN'T WAIT when CLEAR flips to LTE-Advanced ;) Hopefully they will still be affordable ...

11. jamrockjones

Posts: 345; Member since: Oct 26, 2011

This will be a critical time for Sprint. With all these new advancements they'll either end up growing significantly or go broke trying!

13. xq10xa

Posts: 801; Member since: Dec 07, 2010

CLEAR 4G internet is really good if you live in the right area. You can even take the modem with you and simply plug it in to a wall anywhere CLEAR is available. I dunno I like em

14. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

Yeah, when I moved into my place a didn't realize that when the landlord renovated he didn't include and phone or cable jacks on the wall. Maybe the contractors he used were horrible and just dry walled right over the outlets. I don't know. But that's something I just took for granted as being included and didn't even look for. Clearwire was there to save the day though by just being able to plug into a wall.

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