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Clearwire in Euro Partner Talks

Michelle Donegan
LR Mobile News Analysis
Michelle Donegan
6/26/2008

Clearwire LLC (Nasdaq: CLWR) CEO Ben Wolff tells Unstrung that he may forge partnerships in Europe similar to the new Clearwire deal in the U.S. to help it build out mobile WiMax networks across the region and that there are already talks of possible tieups.

Clearwire plans to create a $14.5 billion mobile WiMax giant by pooling its WiMax assets with Sprint Corp. (NYSE: S)’s Xohm network assets into a new company and adding additional financial backing of $3.2 billion from Intel Corp. (Nasdaq: INTC), Google (Nasdaq: GOOG), and three cable operators -- Bright House Networks , Comcast Corp. (Nasdaq: CMCSA, CMCSK), and Time Warner Cable Inc. (NYSE: TWC). (See Sprint: 4G & M&A Still Unclear, Clearwire: We'll Kick LTE's Butt, Can Clearwire Do It?, and Clearwire Won't Use Google's Dark Fiber.)

Now, it appears the U.S. WiMax pioneer is also eyeing Europe, where it owns licenses in seven countries, covering 200 million people.

“There are ongoing talks about potential partnerships,” says Wolff. “The transaction in the U.S. has prompted some interest. It might behoove us to partner with those companies who might bring something more to the table.”

Wolff would not specify which companies he was talking to or elaborate on these discussions, but talk of “potential partnerships” would indicate that any discussions would be at a very early stage. But he hinted at what kind of company would be helpful for Clearwire in Europe.

“Companies who could bring infrastructure and customer bases and help us achieve our objectives faster,” says Wolff. “For example, our U.S. partners have given us a leg-up on deployment and our service offering.”

Wolff stressed that these talks were not about hocking Clearwire’s European spectrum. “I don’t think we’ve ever said anything about selling the asset...

“To launch networks has always been our intent. We’ve been acquiring spectrum because we think there are good business opportunities. We’ve been assembling plans for launches in all those markets.”

Clearwire’s expansion into Europe goes back to 2004. Since then, Clearwire has acquired 3.5 GHz licenses in Belgium, Germany, Ireland, Poland, Romania, and Spain, and through its affiliate in Denmark, Danske Telecom A/S . As of the end of March, Clearwire had just 51,000 customers in Brussels and Ghent, Belgium; Dublin; and Seville, Spain. (See Clearwire Invests in Europe, Clearwire Goes European, Clearwire Expands in Europe, Clearwire Goes to Spain, Spectrum Up for Grabs in Europe, and Euro WiMax RFPs Heat Up.)

Clearwire’s slow progress in Europe has not been due to a lack of access to capital, says Heavy Reading senior analyst Patrick Donegan.

“The challenge for Clearwire’s business model in Western Europe is becoming more and more challenging with every passing quarter,” says Donegan. “It’s very difficult for a new entrant to generate a viable business case for consumer broadband services using Wimax in a market which is relatively densely populated, has more than 50 percent broadband penetration, and where low-cost mobile broadband with pretty good coverage is taking off in a big way in the form of the High Speed Packet Access (HSPA) services of the 3G operators.”

A recent decision from the European Commission that encourages member countries to allow mobility in the 3.5 GHz frequency band at least makes Clearwire’s spectrum more valuable. And Wolff says the decision will allow the service provider to deliver “4G mobile Internet services across the E.U. We have a fairly impressive footprint and a tremendous opportunity to bring a differentiated service across the E.U." (See Clearwire Applauds EC Decision and Ofcom Grants License Change.)

Asked whether Clearwire will be bidding in the upcoming 2.6 GHz auctions across Europe, Wolff said: “We haven’t made any comments about future spectrum plans or acquisitions.” (See Swedish 4G, Germany Delays Auction, Craig Goes to Norway, Europe Makes Way for WiMax, and Ofcom Delays 2.6GHz Auction.)

Back at home
In the U.S., Wolff said that the deployment for the service provider’s first 802.16e mobile WiMax network is well underway in Portland, Ore. He said there will be 300 cell sites that serve Portland initially and the network will be ready for launch toward the end of the year. There are a “couple hundred” customers on the network now in a beta trial, and there will be a soft launch this fall, said Wolff. After Portland, Clearwire will deploy mobile WiMax in Atlanta, Las Vegas, and Grand Rapids, Mich.

— Michelle Donegan, European Editor, Unstrung

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