Clearwire (NASDAQ:CLWR) CEO Erik Prusch called the signing of Cricket provider Leap Wireless (NASDAQ:LEAP) to a five-year LTE wholesale agreement a "milestone" but said the company is hunting for more wholesale customers.
"Leap is another milestone and it's not going to stop here," Prusch told Bloomberg. In a separate interview with the Wall Street Journal, Prusch said that talks with other carriers about buying wholesale capacity are ongoing, though he declined to name potential partners.
Leap appears to be replacing its March 2011 deal with LightSquared for LTE with its new one with Clearwire. In March 2011 Leap announced an LTE roaming deal with LightSquared that would allow Leap to supplement its LTE coverage by roaming on LightSquared's planned network. However, LightSquared's planned buildout has stalled amid worries of the interference its planned network could cause to GPS receivers. Prusch said told Bloomberg there isn't a "direct association" between the Leap deal and LightSquared's problems. "We have a network that's in operation," he said, presumably referring to Clearwire's existing WiMAX network. Clearwire's deal with Leap involves its planned LTE network.
Still, Clearwire has already announced two agreements with companies that had signed deals with LightSquared: MVNE Simplexity and FreedomPop, which aims to provide mobile broadband on a freemium model. Other companies that signed deals with LightSquared include C Spire Wireless and rural carrier SI Wireless.
Flat-rate player MetroPCS (NYSE:PCS) has said in the past it might be interested in buying wholesale capacity from Clearwire. MetroPCS "may also be considering a more formal relationship with Clearwire," Jennifer Fritzsche, a Wells Fargo Securities analyst, wrote in a research note, according to Bloomberg. A MetroPCS spokesman declined to comment specifially on potential deals with Clearwire, but told FierceWireless that MetroPCS is "considering all of its options and looking opportunistically at spectrum acquisition."
Interestingly, Prusch told the Journal that Leap is not being held to any data volume commitments in its contract and won't need to make prepayments to Clearwire. Full financial terms of the deal were not disclosed. Leap's arrangement sits in contrast to the one Clearwire struck in December with majority owner Sprint Nextel (NYSE:S), which also provided funding for Clearwire. Under the terms of its deal with Sprint, Sprint will pay Clearwire up to $350 million in a series of prepayments over a period of up to two years for LTE capacity if Clearwire achieves certain buildout targets and network specifications by June 2013. Sprint and Clearwire said the agreements also establish long-term usage-based pricing for LTE services.
Clearwire intends to launch 5,000 TD-LTE cell sites by June 2013, and Clearwire CEO Erik Prusch has said that "not too terribly long" after the first 5,000 sites are online, Clearwire will expand that coverage to 8,000 sites. Clearwire hasn't yet disclosed the locations of those buildouts but Prusch said Wednesday the company will spend its money on "urban cores" where traffic is highest--presumably to get as much as wholesale revenue as possible.
- see this WSJ article (sub. req.)
- see this Bloomberg article
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