Remember last summer when Clearwire’s stock nose dived following the partnership between Sprint and LTE network provider LightSquared? I am sure the folks at ClearWire do since the stock took a 20 percent beating in one day.
At the time, Clearwire issued a strongly-worded statement that read in part:
“We fail to see how the agreement announced today solves any of the significant problems facing LightSquared, such as its lack of usable spectrum for a 4G LTE network, its significant technical and regulatory problems, and its need to raise billions of dollars in additional funding to cover its obligations to Sprint.”
Well, as it turns out, Clearwire was right on the mark. Today, Sprint officially pulled the plug on its contract with LightSquared, returning $65 million in prepayments to the company.
Sprint issued this statement:
Sprint has been and continues to be supportive of LightSquared’s business plans and appreciates the company’s efforts to find a resolution to the interference issues impacting its ability to offer service on the 1.6 GHz spectrum. However, due to these unresolved issues, and subject to the provisions of the agreement, Sprint has elected to exercise its right to terminate the agreement announced last summer. We remain open to considering future spectrum hosting agreements with LightSquared, should they resolve these interference issues, as well as other interested spectrum holders.
Ouch.
Clearwire’s stock is up more than three percent on the news, but it hasn’t quite recovered to the levels before the July 28th announcement between Sprint and LightSquared. Clearwire is now trading at about $2.22 with a market value of $2.8 billion.
Last December, Sprint announced plans to invest $1.6 billion in Clearwire, adding to its previous investments.
Previously on GeekWire: Clearwire touts spectrum as rumors fly about whether it could get the iPhone 5
