Vendor hunger for LTE contracts plays in Clearwire's favor

editor's corner

Chinese vendor Huawei is aiming to gain a deeper foothold in the U.S. market, and Clearwire (NASDAQ:CLWR) could give them their biggest chance thanks to the fact that Clearwire is looking for vendor financing to help pay for its planned rollout of LTE-Advanced network technology.

Speaking at the Goldman Sachs Communacopia Conference in New York, CFO Hope 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.

"They're willing and they're ready, and they'd love us to buy equipment from them," Cochran said, explaining that obtaining vendor financing is contingent on Clearwire first purchasing network equipment from vendors. "I'm also working with vendors on taking an unsecured position as well."

It was more than a year ago that Huawei was bidding on Sprint Nextel's Network Vision contract, which the operator gave to competitors Ericsson (NASDAQ:ERIC), Alcatel-Lucent (NYSE:ALU) and Samsung in December. It reportedly was in the running for LightSquared's planned LTE network too. A Clearwire deal may represent one of the last changes Huawei has to significantly crack the U.S. market, although it does have deals with Clearwire on the WiMAX side, Leap Wireless and Cox Communications. Huawei, which is blazing trails in Europe, has a reputation for offering generous vendor financing.

But there are other vendors who are desperate to get a bigger piece of LTE in the U.S., where Ericsson and Alcatel-Lucent are dominating at the moment. Samsung is a candidate along with Nokia Siemens Networks (NSN), which recently saw its role in LightSquared's planned network significantly diminished thanks to its network sharing deal with Sprint.

As such, Clearwire will likely find itself in the driver's seat when it comes to choosing an LTE infrastructure supplier and receiving the most attractive financing terms. There aren't any major LTE contract up for grabs in North America anymore.--Lynnette

P.S. Check out my latest feature on the momentum of TD-LTE, which offers more details of Clearwire's LTE plans. Click here.