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Clearwire closing in on the magic LTE investment number

pile of cash

Clearwire’s(s clwr) financial announcement Monday morning seemed innocuous enough: The underwriters of its $350 million stock offering are exercising an option to purchase another $52.5 million in shares. That’s hardly big money in the world of telecom finance, but what the release doesn’t tell you is that with the option, the value of Clearwire’s public offering now breaks the $400 million mark. And $400 million is the magic equity number that triggers a big investment by Sprint(s S) and marks the beginning of Clearwire’s LTE rollout.

If the offering is successful, Sprint will kick in as much as $347 million to maintain its current 49.6 percent ownership stake in the WiMAX operator. Clearwire has said it would use those funds for any number of housekeeping items, including operations and maintenance, but the big-ticket item on its to-do list is its planned LTE network. Clearwire has said it needs $600 million in new capital to get its time division LTE (TD-LTE) launch off the ground, so the majority of that investment will almost certainly go toward a massive infrastructure build.

Clearwire plans to overlay TD-LTE in all of its WiMAX markets, which currently covers 132 million people in 72 markets, deploying the network in hot zone clusters. That hardly gives Clearwire a nationwide network, but if it meets certain coverage targets, Sprint has agreed to provide more funding, which Clearwire could use to launch the second phase of its rollout. Given the problems Sprint’s other LTE partner LightSquared is having with regulators, Sprint has even more incentive to ensure Clearwire gets its network built.

Image courtesy of Flickr user Tracy O.

3 Responses to “Clearwire closing in on the magic LTE investment number”

  1. I’ll believe it when I see it. Clearwire also had the “magic number” to build the nationwide WiMAX network, but Bill Morrow went and spent nearly 2 billion on a retail campaign. This is a huge opportunity for both Clearwire and sprint, but I would not hold my breath. Until sprint gains full control of clearwire, the saga will continue and sprint will miss out on yet another great opportunity.

    • Kevin Fitchard

      Hi Grant, I see your point. Clearwire and Sprint don’t exactly have a history of seeing things to completion. Though with this story, I was only meaning to imply, Clearwire is closing in on the equity investment it needs to begin the LTE rollout.

  2. Kobe Wadsworth

    This is just great news. I have said time and time again, how important clear was to this space. And the technology they will be using for their LTE is going to go a long ways, I’m talking Global here. As their are many countries aboard the TD train. So sprint will have both flavors of LTE. This could be the start of some serious speed. and there is a need for speed right about now in the wireless arena. The 4G space is heating up once again, but this time giddy up go fast is on the horizon.