Clearwire (NSDQ: CLWR) will live to fight on thanks to a cash infusion from its good buddy (or frustrated spouse, depending on how you see things) Sprint (NYSE: S), which has agreed to spend as much as $1.6 billion in payments to use Clearwire’s WiMax network over the next several years. As bleak a year as it has been for Clearwire, things would have gotten much worse without Thursday’s agreement.
There are two components to the deal. Sprint has agreed to spend $926 million, of which around $620 million will be spent in 2012, in order to access Clearwire’s WiMax network. Sprint also uses WiMax as its 4G network technology but can augment its reach with access to Clearwire’s network. Under the new deal, Sprint will be able to use that network through 2015 but it has only committed to the next two years.
Sprint has also agreed to help Clearwire fund its decision to build an LTE network, which given the lack of interest in WiMax among consumers and handset makers is vital to both Sprint and Clearwire’s future. Sprint agreed to pay Clearwire up to $350 million to help fund that network assuming Clearwire can hit certain targets by June 2013.
Without this new investment from Sprint, Clearwire might not have been able to make a vital interest payment on its substantial debt that was due today. Its stock had fallen to nearly $1 a share before rebounding Thursday on news of the deal.