[WiMAX] An expanded view from of the WiMAX options Sprint is considering, from today's WSJ. Also see yesterday's report from Light Reading, uplinked at Message # 22009. A review and critique of the claims and positioning statements seen below by the board's wireless mavens would be appreciated, as always.
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Sprint Explores Options for WiMax
By Amol Sharma and Dana Cimilluca
June 14, 2007 | WSJ
online.wsj.com
Sprint Nextel Corp. is exploring new options for financing its ambitious plan to build a wireless broadband network known as WiMax, including forming a partnership or joint venture with cellphone pioneer Craig McCaw and seeking an infusion of cash from cable providers, people familiar with the matter say.
The steps are partly an effort to soothe investor concerns about the cost of the WiMax plan. Sprint has committed to spending about $3 billion through next year to build a network that will offer high-speed wireless Internet access to 100 million people. Activist investor Ralph Whitworth, whose firm Relational Investors recently bought at least 1% of Sprint, has questioned management about the company's WiMax strategy.
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At a Bear Stearns Cos. conference this week, Sprint Chairman and Chief Executive Gary Forsee suggested Sprint would consider spinning off the WiMax unit, but didn't provide further details. One idea being considered would be to spin off Sprint's WiMax unit as part of a deal with Mr. McCaw's Clearwire Corp., people familiar with the matter say. The two sides have had discussions in recent months, the people say.
Clearwire, based in Kirkland, Wash., was founded in 2003 by Mr. McCaw, who gained wide attention when he sold his early cellphone venture to AT&T for $11.5 billion. The company operates a high-speed wireless Internet service similar to WiMax, serving about 258,000 customers in 38 U.S. markets. Despite rapid growth, Clearwire isn't profitable. Its shares have dropped about 20% since it went public in March.
A deal with Clearwire would remove a potential competitor for Sprint and give it access to Clearwire's radio spectrum in crucial southeastern U.S. markets like Miami and Atlanta -- as it tries to build a nationwide network. Sprint also might strike a more modest partnership with Clearwire, simply acquiring some of its spectrum or establishing a roaming partnership, people familiar with the matter say. A spokesman for Clearwire declined to comment.
Today, Clearwire announced partnerships with satellite providers DirecTV Group Inc. and EchoStar Communications Corp. that will enable the company to offer their video services to subscribers later this year. The satellite TV companies, in return, will be able to offer Clearwire's high-speed wireless Internet service as part of their service bundles or on a stand-alone basis.
Mr. Forsee said Sprint might be interested in attracting outside investors to help finance its buildout of WiMax. The company sees cable companies as a potential source of cash, people familiar with the matter say. Sprint and four leading cable operators already have a joint venture called Pivot that enables the cable companies to market wireless service as part of their service bundles. Time Warner Cable Inc., one of the cable companies involved in Pivot, has had informal discussions with Sprint regarding WiMax, according to a person familiar with the talks.
One potential sticking point is that cable providers want a guarantee that they would be able to lease access to the WiMax network at low cost to offer future broadband services, people familiar with the matter say. A Sprint spokeswoman declined to comment on specifics but said the company will "continue to look opportunistically at ways to unlock value for shareholders."
Mr. Forsee, who is already under pressure to boost cellphone subscriber growth after several sluggish quarters, is in a tricky position with WiMax. He wants to reassure investors who are skittish about high capital spending, but also wants Sprint to retain control of an asset that might distinguish it from competing carriers in the future.
Sprint envisions using WiMax to let customers log onto the Web wirelessly with a phone or laptop at speeds more than double what they can get on current cellular networks. WiMax also could eventually power a range of consumer electronics devices, from videocameras to MP3 players, Sprint says. The company also envisions advertisers embedding WiMax functionality into outdoor billboards, people familiar with the matter say.
Sprint's stock, which was trading in the $17 range earlier this year, has rebounded to about $22 now, but it is still shy of its $26 level in August 2005, when it closed its acquisition of Nextel Communications Inc. The recent rise has been fueled partly by speculation the company could be a target for a leveraged buyout. Last month, cellular carrier Alltel Corp. agreed to be acquired by a pair of private-equity firms for $27.5 billion. Many industry observers doubt Sprint will be acquired at its current valuation.
Write to Amol Sharma at amol.sharma@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com
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