Sprint Nextel and Clearwire agreed to jointly build a nationwide mobile broadband network using WiMAX technology and to promote the global development of WiMAX-based services. The partnership significantly reduces the cost of network construction and is expected to accelerate the rollout of a 4G service.
Under the network build-out plan, Sprint Nextel will focus its efforts primarily on geographic areas covering approximately 185 million people, including 75 percent of the people located in the 50 largest markets, while Clearwire will focus on areas covering approximately 115 million people. Initially, the two companies expect to build out network coverage to approximately 100 million people by the end of 2008, with seamless roaming enabled between the deployed areas.
The arrangement also will provide for the exchange of spectrum between Sprint Nextel and Clearwire to enable each company to build out its portion of the network and to enhance service in its build-out territory, as well as for the exchange of other assets associated with this spectrum. In addition, Clearwire will have the ability to utilize certain Sprint Nextel 3G infrastructure.
Sprint Nextel and Clearwire will market mobile WiMAX services under a common service brand, and Clearwire will offer mobile WiMAX services in Clearwire’s territories through Sprint Nextel’s retail stores, and through its own distribution channels. Both companies will provide seamless reciprocal roaming service to each others’ WiMAX customers, and Sprint Nextel plans to provide dual-mode (CDMA-WiMAX) services nationwide to its customers over both its own and Clearwire’s portion of the WiMAX networks.
Sprint Nextel and Clearwire expect to build their respective portions of the nationwide network, and enable roaming between the respective territories. The companies also will work jointly on product and service evolution, shared infrastructure, branding, marketing and distribution.
The companies said they would work with multiple vendors in order to ensure a broad ecosystem of WiMAX vendors.
Both companies affirmed their intend to provide consumers, businesses and distributors across the country with access to the open Internet.
“This arrangement will result in stronger competition in the rapidly growing market for broadband services, and will provide consumers, national enterprises and other businesses, educators and public safety agencies greater choice and faster access to a revolutionary mobile broadband technology,” said Sprint Nextel Chairman and Chief Executive Officer Gary Forsee.
Sprint did not say specifically how the new build-out will affect its capital expenditure plans, but noted that this new partnership plan is approximately a 70/30% split and would reduce expenditures.
Sprint also noted the Clearwire deal will not impact its partnerships with major cable operators.
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- Earlier this month, Clearwire closed and funded its first tranche of a fully committed $1 billion senior secured term loan, the remainder of which will be funded on a delayed draw basis in approximately 45 days. The money will be used for the company’s expansion and to refinance Clearwire’s existing loans.
