Clearwire Nabs $900M, Nixes IPO

Wireless broadband provider Clearwire LLC (Nasdaq: CLWR) is abandoning its $400 million IPO, as it receives a cool $900 million in a financing round led by Intel Capital . Furthermore, Clearwire has sold its subsidiary NextNet Wireless Inc. to Motorola Inc. (NYSE: MOT), which will now be Clearwire's chief provider of WiMax wireless broadband network equipment.

Clearwire filed for a public offering on May 11, with plans to raise $400 million for "network expansion, spectrum acquisitions and general working capital purposes," according to a filing with the Securities and Exchange Commission (SEC) . (See Clearwire Files $400 Million IPO.)

But the company canceled its plans in another SEC filing on July 5.

"The Registrant has determined not to proceed with the registration and sale of its Class A common stock at this time," says the new filing. "No shares of Class A common stock have been offered or sold under the Registration Statement."

Instead, the company is receiving an equity investment of $600 million from Intel Capital and $300 million from Motorola Ventures , which Clearwire plans to use toward deploying WiMax networks based on the 802.16e mobile WiMax standard, according to a company statement.

"The investment makes sense," says Kent Cook, a spokesman for Intel. "We're clearly behind WiMax, and we think it's a very, very important technology. The U.S. is an important geo, and it's going to be expensive to build a network of great scale in the U.S."

Clearwire, founded by industry maverick Craig McCaw in 2003, offers fixed wireless broadband Internet service to some 200 communities in the U.S. and Europe, in the 2.5GHz and 3.5GHz spectrum bands, respectively. Although the company currently uses proprietary technology, McCaw has said from the get-go that the plan is to move toward the 802.16e mobile WiMax standard.

In addition to the investment, Motorola is buying Clearwire subsidiary NextNet Wireless, which makes OFDM-based wireless broadband infrastructure equipment. The deal is expected to close in the third quarter of 2006; financial terms have not been disclosed. Clearwire, Intel, and Motorola plan to work together to "evolve" NextNet technology to support standard WiMax, according to company officials.

"Along with its trials with Sprint Corp. (NYSE: S), and a contract with Wateen Telecom of Pakistan, this new supply agreement with Clearwire shows that Motorola is leading the vendor market in terms of the number of significant WiMax infrastructure references it can point to," says Patrick Donegan, an analyst at Heavy Reading.

In the U.S., the 2.5GHz band is considered the most likely future home for 802.16e deployments. The chief holders of this spectrum in the States are Clearwire and Sprint Nextel. Clearwire has made a name for itself serving rural markets, leaving big city deployments up to Sprint. "Go to Waco [Texas] and there are Clearwire billboards everywhere," says Carlton O'Neal, vice president of marketing at Alvarion Technologies Ltd. (Nasdaq: ALVR), which makes WiMax base stations. [Ed. note: Let's not, actually.]

Sprint, for its part, has yet to announce its plans for its 2.5GHz spectrum, much of which it must use or lose by 2009, per an order from the FCC. But as Donegan mentioned, the company has announced trials of WiMax, along with several other wireless technologies. (See Sprint Nextel Hunts for 2.5GHz Service and Sprint Hints at Spectrum Plans.)

Intel won't say whether or not it is putting any money behind Sprint's decision. "One $600 million-dollar investment a week is probably sufficient," Cook says. But Intel is clearly encouraging the carrier to go with WiMax. "We're certainly in discussions with Sprint," Cook says. "Anything that expands the range of WiMax we're definitely interested in."

— Carmen Nobel, Senior Editor, Light Reading