Sprint is targeting a big 4G network push next year, with company executives saying today that its high-speed LTE wireless network will cover 120 million people by the end of next year. But what does that mean for Clearwire, which has provided the backbone for Sprint’s wireless data network for the past few years?
Clearwire investors seem to have an answer to that question, and it’s not good news. Clearwire stock plummeted more than 30 percent after Sprint discussed its 4G network plans, which could grow to cover some 250 million people by the end of 2013.
Investors are questioning whether there’s a place in the landscape for Clearwire — and its WiMax network — with Sprint’s new focus.
Those questions were also raised today at the presentation, with Cnet’s Roger Chen providing a good play-by-play of the fireworks. Cheng writes:
Indeed, early during the presentation, Clearwire was never mentioned, with the company only referencing WiMax. Clearwire’s stock retreated today. It wasn’t until around two hours into the presentation that Chief Financial Officer Joe Euteneuer noted its relationship with the company.
“(Clearwire) continues to be a value to us,” he said, adding there were no updates to the relationship.
But the crowd got testy as executive worked to justify its own 4G strategy and avoid commenting on whether it would provide financing to Clearwire, which many are concerned could eventually go under. Executives fired back at one speaker who questioned their strategy.
Meanwhile, in response to the remarks, Clearwire has issued its own statement about its 4G network. The company said:
“As the largest wholesaler of 4G capacity, with unmatched spectrum, Clearwire is uniquely positioned to offer capacity to Sprint, and other carriers, particularly in urban areas where demand is high and their 4G spectrum will be inadequate. Sprint remains dependent on Clearwire for 4G and nothing about today’s announcement changes that. Even with their re-allocation of existing spectrum, it’s obvious that their spectrum resources are insufficient to meet the long term demands of mobile data, but this is not unique to Sprint. Data capacity will clearly stress the capabilities of the low capacity 4G deployments of other carriers due to their spectrum constraints.
“We are also working globally with other members of the Global TDD-LTE Initiative (GTI), including China Mobile, to develop a low-cost, highly scalable device ecosystem that will work across various LTE networks and frequencies. As demand for mobile data increases, Clearwire remains the only viable 4G wholesaler with an operating 4G network, substantial spectrum resources, and a global technology road map to serve this growing market.”
There’s certainly a lot at stake as these wireless giants try to move forward.
As noted in its statement above, Clearwire is pushing forward with its own LTE network expansion. But that’s dependent upon new financing, a potentially tough sticking point for the company.