Clearwire courts AT&T, Verizon and others as wholesale customers

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Clearwire (NASDAQ:CLWR) CEO Erik Prusch said the company is talking with multiple wireless carriers about selling capacity on its 4G network, which may be a way for the cash-strapped company to secure more funding as it tries to deploy an LTE-Advanced network.

Clearwire (NASDAQ:CLWR) CEO Erik Prusch

            Prusch

In a series of interviews with media outlets, Prusch made clear that Clearwire is in negotiations with a range of carriers, including AT&T Mobility (NYSE:T), Verizon Wireless (NYSE:VZ), MetroPCS (NASDAQ:PCS) and Cricket provider Leap Wireless (NASDAQ:LEAP). The talks, which have not yet yielded any concrete wholesale relationships with new carriers, are an indication of the funding crunch Clearwire is in as well as the willingness of Sprint Nextel (NYSE:S), Clearwire's majority owner and largest wholesale customer, to allow Clearwire to find new wholesale partners.

"All those discussions are under way," Prusch told Bloomberg. "I'm confident we'll bring in new wholesale partners. Our message to the industry is that we've got the capacity to handle their needs."

Similarly, he told the Wall Street Journal that the talks are "continuing and getting better," adding, "I'm very optimistic. I wouldn't be building the network or trying to raise money if I didn't think customers would be there in the end."

Earlier this week Clearwire CFO Hope Cochran said the company has a range of available options in its efforts to pay for its planned rollout of LTE-Advanced network technology, including vendor financing and a possible sale of the company's excess spectrum. Speaking at the Goldman Sachs Communacopia Conference in New York, Cochran said vendor financing could be a "large anchor" in Clearwire's efforts to raise between $150 million and $300 million for the maintenance of its existing WiMAX network and the $600 million the company needs to begin rolling out LTE-Advanced network technology using the TDD configuration.

On Thursday, she told Reuters that Clearwire favors a balanced approach to securing new funding and will need to have financing in place before upgrading to LTE. She also said the new funding could come in the form of a new strategic equity investor.

A wholesale relationship with another carrier might face technological hurdles since all other U.S. carriers are using FDD configurations for LTE and Clearwire would need to have chipsets in devices that support both TDD and FDD. However, chips that support both flavors of LTE are expected to be widely available and in devices within a year, and Clearwire has said that once it gets funding it will likely take up to a year to complete LTE market overlays anyway.

Sprint indicated that it had no problem with Clearwire exploring the possibility of adding more wholesale customers. "Their business is to be a wholesale provider of 4G capacity," Sprint spokesman Bill White told Bloomberg. "They can sell to whoever they want to. We want Clearwire to be successful."

Sprint CEO Dan Hesse said earlier this week at the Goldman Sachs conference that Sprint will likely discuss the possibility of providing more financing for Clearwire when it goes over its 4G strategy at an investor conference Oct. 7.

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article

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