Clearwire and Sprint this morning announced a new agreement that could provide Clearwire with as much as $1.6 billion over the next four years. With the deal, the Kirkland-based wireless broadband company announced that it has made a $237 million debt payment that it had considered skipping to preserve cash.

Also of note: The companies agreed that ClearWire’s WiMAX network will operate through at least 2015, even as the companies shift their focus to the competing LTE standard. Sprint, which uses Clearwire’s WiMAX network for its 4G wireless service, said it will continue selling WiMAX devices until at least 2012, and support them under two-year contracts.

Clearwire shares — which plunged when the company was considering skipping its debt payment — are up significantly on the news of the funding this morning.

The deal illustrates the complicated relationship between Clearwire and Sprint, which is simultaneously Clearwire’s majority owner and largest customer. It also shows that Clearwire made an ill-fated bet, spending big to build out its WiMAX network and now reversing course as LTE emerges as the more popular standard.

Under the deal, Sprint will pay Clearwire $926 million for WiMAX over the next two year, and up to $350 in pre-payments to help fund Clearwire’s efforts to roll out an LTE network. In addition, Sprint committed to provide up to $347 million in additional funding to Clearwire as part of a possible future equity funding round for the Kirkland company.

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  • Arlington Albertson

    This whole Wimax/LTE debacle has been a point of sadness for me. I was pretty heavily active in researching Wimax and the whole “4G” technology way back when it was just a thought and was so excited to see this come about.

    It would have been great if Clearwire had the foresight to see what the Carriers would end up wanting (wimax OR LTE) and gone with the one they would support. Granted that doesn’t necessarily make it the “best” choice technologically speaking, and it doesn’t mesh with a company wanting to “buck the trend”, but in this case (and specifically the case of Broadband access in general), getting on the bandwagon with LTE would have been FAR better preferred as it would have opened up the options for universal access so much more.

    Now I guess we’ll just have to hope that CW can make the transition quickly and painlessly and move on to LTE (and hopefully LTE Advanced).


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