Clearwire announced plans to raise US$300 million through a public offering, including cash which will be used for its planned rollout of an LTE network. Following the company’s refreshed partnership with Sprint, the US number three operator is also set to make a similar sized investment in Clearwire in a separate transaction, reflecting its around 50 percent ownership of the wholesale business. According to Bloomberg, Clearwire stands to raise around US$595 million from the two transactions.
Clearwire intends using the cash for “general corporate and working capital purposes, including the deployment of mobile 4G LTE technology alongside the mobile 4G WiMAX technology currently on its network and for the operation and maintenance of its networks.”
The US wholesale player announced its plans to rollout LTE alongside its existing WiMAX infrastructure in August 2011, but noted at the time that this was subject to additional funding requirements.
The Associated Press noted that the transaction is likely to dilute the value of existing shareholders by around 30 percent – while removing the possibility that Clearwire will need to file for bankruptcy protection, which would have “wiped out all shareholder value.”
Jonathan Chaplin, an analyst with Credit Suisse, told Bloomberg that Clearwire’s new funding strategy is “transformative,” bearing in mind that “this was a company flirting with bankruptcy just a week ago.”
Less positively, CNET reported that Comcast and Time Warner Cable are to stop reselling Clearwire’s services, as a result of the creation of a partnership between the cable companies and Verizon Wireless following a US$3.6 billion spectrum sale. It was suggested Comcast and Time Warner, alongside peer Bright House Networks, had a “lukewarm” relationship with Clearwire, resulting from uninspiring customer adoption.
In its third quarter 2011 results release early last month, Clearwire said its wholesale subscribers “consist primarily of Sprint 3G/4G smartphone customers.”
Time Warner Cable, Comcast and Bright House Networks are also cuurently shareholders in Clearwire – it is not clear if the companies plan exiting the partnership in future. Each company holds less than 5 percent of Clearwire.
Earlier this year, Intel announced the sale of some of its Clearwire holding.