Report: Clearwire to Get $1.5B Funding Bump
Sprint reportedly will invest $1 billion in Clearwire, while the other joint venture partners -- Comcast Corp. (Nasdaq: CMCSA, CMCSK), Intel Corp. (Nasdaq: INTC), Time Warner Cable Inc. (NYSE: TWC), and Bright House Networks -- will chip in $500 million. Google (Nasdaq: GOOG), another Clearwire partner, is not involved in this latest funding, says the report.
But the new $1.5 billion cash injection falls short of the $2 billion to $2.3 billion that Clearwire originally said it would need to complete its national WiMax network, which was in addition to the $3.2 billion contributed by Google, Intel, and the three cable companies when the new Clearwire joint venture was formed. (See Clearwire: We'll Kick LTE's Butt, Sprint, Clearwire Create $14.5B WiMax Giant, and Clearwire Has Cash for 'at Least' 12 Months .)
More recently, Clearwire CEO Bill Morrow said the company had enough cash on hand -- $2.5 billion, in fact -- to roll out the WiMax network to cover 75 million people, but more money would be needed to cover the planned 120 million by the end of 2010. Morrow said in August that he was confident of getting that funding. (See Clearwire 'Confident' on Funding.)
But even this reported $1.5 billion top-up may not be enough for the WiMax operator. Clearwire may have to look for additional funds again next year, according to Soleil Securities Group Inc. analyst Michael Nelson. "We project a $3.4 billion cumulative funding gap by 2013 and the potential need to raise additional capital as early as 2010," writes Nelson in a research note issued today.
The news of additional funding comes on the heels of Sprint CEO Dan Hesse's recent public statements that the U.S. operator would keep Clearwire in funds, if necessary. (See Hesse: We'll Keep Clearwire Flush.)
The WSJ report also notes that Clearwire's efforts to attract new investors, such as Deutsche Telekom AG (NYSE: DT), did not work out. (See Could Clearwire Help T-Mobile Find a 4G Fit?)
— Michelle Donegan, European Editor, Unstrung