Clearwire to start major TDD-LTE network construction in Q4
Clearwire (NASDAQ:CLWR) CFO Hope Cochran said that the company will begin building out its TDD-LTE network this quarter but that construction will pick up significantly in the fourth quarter.
Speaking at the Goldman Sachs Communacopia Conference, Cochran said that Clearwire is in constant contact with its wholesale partners, and especially Sprint Nextel (NYSE:S), about its LTE buildout. Sprint is Clearwire's largest wholesale customer and shareholder and plans to use Clearwire's TDD-LTE network to augment its own FDD-LTE service. Cochran said that Clearwire is "talking to Sprint at all times to make sure it's there when they need it."
Clearwire intends to deploy LTE at 5,000 cell sites by June 30, 2013, in areas of high network traffic and congestion, since Clearwire will charge Sprint usage-based pricing for access to its LTE network. "We're focused on putting in capacity where congestion will happen quickly," Cochran said. "So when we see we can get the revenue from that site, that's where we're focused."
Clearwire intends to make use of vendor financing for its LTE network buildout, and will announce its vendors next month. Cochran said the vendor financing deals are not tied to company's liquidity or financial position.
The transition to the LTE network is coming as a critical time for Clearwire. As Sprint deploys its LTE network, it is sending fewer wholesale WiMAX customers Clearwire's way, though Sprint is paying Clearwire a flat $900 million fee for WiMAX access this year and next. Time Warner Cable recently said it will sell its entire 7.8 percent stake in Clearwire, due in large part to TWC's new relationship with Verizon Wireless (NYSE:VZ), which allows it to resell Verizon's service.
Cochran said that nothing about Clearwire's relationship with Sprint legally forbids Clearwire from striking wholesale partnerships with other carriers. However, she said that Clearwire does need to think of its strong relationship with Sprint when looking at other deals. "I do feel that Clearwire and Sprint are very aligned," she said, adding that Clearwire's LTE buildout benefits both companies.
Leap Wireless (NASDAQ:LEAP) signed a five-year wholesale agreement with Clearwire earlier this year that will allow the Cricket provider to buy capacity on Clearwire's LTE network. Interestingly, Cochran said that Clearwire will establish a "light" LTE core network that will feed traffic off its LTE sites into the core networks of Sprint, Leap and presumably any other facilities-based carrier that uses Clearwire's network.
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