Hesse: We'll Keep Clearwire Flush
But Sprint is prepared to do so only if it's absolutely necessary, noted Sprint CEO Dan Hesse when the Clearwire funding topic came up Thursday during his chat at the Goldman Sachs & Co. "Communacopia" conference in New York City.
"The original plan when we launched the company was they could go to the public markets for funding. If the funding isn't there, we are clearly willing and able to step up to our fair share of whatever that funding requirement is," Hesse said, noting that the goal with Clearwire is "that they keep building out that 4G network very, very quickly."
"We're building a 4G network, but we don't have to invest all of it," Hesse said. "So... yes, we are willing to fund the company, [but] our intention is to maintain our current ownership percentage (51%)."
Although Clearwire has a "lot of really strong... funders," as Hesse put it, not all of them appear to be trumpeting the same level of commitment, should Clearwire need to bridge any financial shortfalls.
Earlier this week at the same conference, Comcast Corp. (Nasdaq: CMCSA, CMCSK) CFO Michael Angelakis said the MSO isn't under any obligations to invest more in Clearwire, though it's difficult to imagine a scenario in which Comcast would simply allow the joint venture to twist in the wind since WiMax is now central to the operator's mobile broadband strategy. Comcast, which presently holds an 8.5 percent stake in Clearwire, has "preemptive rights" to put more on the pile, however. Google (Nasdaq: GOOG), Intel Corp. (Nasdaq: INTC), Time Warner Cable Inc. (NYSE: TWC), and Bright House Networks are among Clearwire's other sizable investors. (See Comcast Keeps Mobile Spectrum Sidelined.)
And Clearwire might need some of those folks, or some new investors, to step up. About a year ago, the company said it had enough funding for "at least 12 months." More recently, Clearwire CEO Bill Morrow expressed confidence that the company does have the necessary funds, or can at least get access to them, to complete the network rollout. (See Clearwire Has Cash for 'at Least' 12 Months and Clearwire 'Confident' on Funding.)
Hesse, meanwhile, assured the Goldman Sachs audience that Sprint will keep capital spending under control as WiMax network deployments are wrapped up.
Capital spending in completed Clearwire markets "basically stops because what we are investing our capex on is more data capacity for 3G," Hesse said. "Once 4G is available... our AirCard customers are going to shift in a heartbeat to dual-mode 4G/3G, which will offload an awful lot of traffic off the 3G network."
Hesse also addressed the economy, but wasn't ready to agree with recent declarations that the recession is over
"What we are seeing is... more of a stabilization. The decline is now kind of flattening out," Hesse said. "We are hopeful that we will begin to start seeing an uptick, but haven't seen that yet."
— Jeff Baumgartner, Site Editor, Cable Digital News