It shouldn’t come as a surprise: Clearwire, the WiMAX-based wireless network operator, is looking for a $1.5 billion infusion from Sprint and other backers including cable giant Comcast. Clearwire executives, including CEO William Morrow, have been publicly talking about a need for new capital. The announcement is likely to be made later this week, The Wall Street Journal reports. The investment once again shows that networks cost a lot of money, especially ones that are based on new technologies.
It also shows that Sprint CEO Dan Hesse doesn’t have any choice but to go all in. He was the man who made the decision to merge Sprint’s Xohm business (and spectrum) with Clearwire to form a new company. As a result, Sprint is the largest shareholder of the WiMAX network operator, and “Sprint will use money from its own cash pile or raise new debt for the $1 billion investment,” the Journal reports. About a year-and-a-half ago, Sprint, Intel, Google, Comcast, Time Warner Cable and Brighthouse put a total of $3.2 billion in Clearwire.
Intel is the company’s biggest investor, even though Sprint is the largest shareholder because of its spectrum and other contributions to company. In August, Stacey pointed out that the money Clearwire had was enough to offer service to about 75 million possible subscribers, not enough in its battle against large phone companies.
Interestingly, Google is not likely to participate in this next round of funding. I wonder if that has something to do with Google’s new, cozy relationship with Verizon. With over half a million subscribers, Clearwire hasn’t been a raging success. Its service is available in Chicago, Dallas, San Antonio, Austin, Texas, parts of North Carolina, Philadelphia and Portland, Ore. (Related: “When and Where to Find 4G in Q4″)
Both Clearwire and Sprint are in a race against time: They need the new networks rolled out before Verizon and AT&T launch their next-generation high-speed wireless networks based on Long Term Evolution (LTE) technology. Sprint has been bleeding customers at an alarming rate and soon might find itself at a point of no return. Let’s hope for Hesse’s sake, the Clearwire bet pays off! (Related post: “WiMAX’s Future Is in Emerging Markets”)