Clearwire (NASDAQ:CLWR) will avoid raising new debt for as long as possible so it can steer clear of higher borrowing costs, and will stop plans to release its own banded smartphones, according to John Stanton, the company's chairman and interim CEO. In addition, the company may consider bankruptcy if that's the only option.
In a series of interviews, Stanton provided some insight into the strategic direction of the company, but avoided committing Clearwire to any one path. Stanton, who has been a Clearwire board member since 2008, replaced Clearwire founder Craig McCaw as chairman of the board in January and became interim CEO earlier this month when Bill Morrow resigned. Stanton served as chairman and CEO of VoiceStream Wireless, which was later sold to Deutsche Telekom and became T-Mobile USA.
Clearwire is still exploring all of its funding options and expects to make an announcement in the second quarter. "Because we've many alternatives, it's not wise for a company like us to go out and raise additional debt," Stanton told Reuters, noting that the company's interest payments on its debt are already $480 million annually. Clearwire raised $1.33 billion in debt funding round in December, although Sprint Nextel (NYSE:S), which holds a 54 percent stake in Clearwire and is Clearwire's largest wholesale customer, decided not to buy more of Clearwire's debt.
Clearwire and Sprint are close to resolving a dispute over wholesale pricing, which is key to Clearwire's future. "Any conversation on our balance sheet begins with them," Stanton told the Wall Street Journal. "We have to look at them first, but they've got a lot of priorities as well." He also told the Journal that bankruptcy is a possibility, but said it is "always an ugly option" because the company would lose control of its fate.
Stanton also told Bloomberg that Clearwire is shelving plans to launch its own branded smartphones. Clearwire had postponed the plans in December.
One remaining option for Clearwire is to sell some of its unneeded spectrum. T-Mobile USA was considered a likely spectrum buyer, but that prospect has been shelved thanks to AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile. Stanton seemed undaunted though, telling the Journal, "There are others out there that have a need for spectrum."
Stanton also became the latest executive to criticize the AT&T/T-Mobile deal. He echoed Sprint CEO Dan Hesse and LightSquared CEO Sanjiv Ahuja, by saying the deal will harm competition. Noting how tough of a competitor AT&T is in the marketplace, he said: "They'll beat you up, and then they'll buy you."
For more:
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Bloomberg article
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