The carrier issued a statement praising Clearwire for securing third-party funding, but making it clear that Sprint is still exploring its options for further investment or cutting its voting rights in its WiMax partner. (See Sprint: Clearwire Buy Not in the Cards .)
Sprint wrote that its Equityholders' Agreement with Clearwire has been amended to give it the option of reducing its voting share to below 50 percent without affecting its economic interest in the company. This would mitigate the risk should Clearwire's financial position worsen and possibly take its partner down with it, since Sprint owns a majority voting interest in the WiMax specialist.
Why this matters
Sprint has been distancing itself from Clearwire for a while now, starting with three Sprint execs vacating their seats on the Clearwire board in September, to be replaced with independent directors. But, as Sprint noted in its comments, Clearwire's successful closing of a third-party funding round of $1.1 billion demonstrates its strength as a wholesale WiMax provider. (See Clearwire Grabs $1.1B in Debt Funding.)
It will need more cash to convince Sprint, though. Clearwire is auctioning off its excess spectrum, which could bring in $2 billion more, money it desperately needs as it continues to make cuts and scale back site buildouts. (See Clearwire Cuts as It Hunts for Funding.)
Sprint does, however, retain the right to participate in Clearwire funding up until Jan. 2, 2011, by acquiring up to its pro-rata share of exchangeable notes. But, it's still keeping its options open here as well.
For more details on Clearwire and Sprint's relationship, check out the following stories:
- Clearwire Issues Secured Notes
- Sprint Ready to Leapfrog to Multi-Mode
- WiMax Means Business
- Clearwire Prices Debt Offer
- Clearwire Plots $1.1B Debut Offering
- Clearwire's Spectrum Sale
- What's Really Behind Clearwire's Board Reshuffling?
— Sarah Reedy, Senior Reporter, Light Reading Mobile