Clearwire open to funding from T-Mobile USA

Clearwire (NASDAQ:CLWR) will look to get more funding in the form of debt and an equity purchase by a company like T-Mobile USA, Clearwire's CEO said, giving greater clarity to how the WiMAX provider will continue to fund its operations and buildout.

Clearwire CEO Bill Morrow also said the company could raise money by selling off unneeded spectrum. However, Morrow said that the company's preference is to get an equity investment from a service provider that would rent space on its network at a preferred rate, similar to the deal Sprint Nextel (NYSE:S) has with Clearwire. Sprint holds a 54 percent stake in Clearwire.

T-Mobile and Clearwire are currently holding negotiations about a deal, Morrow said. "In the event we don't come to an equity arrangement, they could be a wholesale customer," he said at the Goldman Sachs Communacopia XIX Conference, adding that if T-Mobile did not become an investor, it would have to pay higher rates for using Clearwire's network. 

Talk of a deal between Clearwire and T-Mobile has built throughout the year. Outgoing T-Mobile USA CEO Robert Dotson confirmed in March that that the nation's No. 4 carrier has talked with Clearwire and various cable companies about a possible joint venture to enhance T-Mobile's spectrum position. Morrow has said in the past that the company is interested in making T-Mobile USA a wholesale customer on its network.

Sprint's board members are reportedly divided over the prospect of T-Mobile becoming a wholesale partner of Clearwire's, but ultimately, the decision is Clearwire's to make. "Let's just say, the largest arch enemy of our top shareholder [Sprint] kind of came in and said we're going to offer you great economic terms, I think the reality is, is if that made sense to us, we'd still get that approved," Morrow said during the company's second-quarter earnings conference call. "We'd naturally take into account all actions or what would affect us from a value standpoint."

The disclosure of continuing negotiations between Clearwire and T-Mobile comes at a critical time for Clearwire, which is aggressively moving to meet a buildout schedule of 80 markets and 120 million POPs covered by year-end. Comcast said this week it probably won't increase its 9 percent stake in Clearwire. Sprint CFO Bob Brust said last week that although Sprint would like to control Clearwire, the carrier does have the cash to purchase Clearwire outright. 

Clearwire "will need cash down the road," Brust said last week at an investor conference. "They haven't told us what they need." Brust declined to speculate on whether or how much more cash Sprint would pump into Clearwire, but said "I can't imagine we're not going to get this worked out."

For more:
- see this Reuters article

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