Venture promises faster wireless

KANSAS CITY, Mo. – Washington state-based Clearwire and Sprint Nextel said Wednesday they will combine their wireless broadband units to create a $14.55 billion communications company.

The new company, which will retain Clearwire’s name, will continue developing a mobile network based on WiMax technology, which promises faster speeds than the latest cellular networks for movies, games and other data services.

A group of outside investors, including Intel Corp., Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks, will kick in $3.2 billion for the new company. The investment is based on a target price of $20 per Clearwire share and will give the companies a 22 percent stake in the new venture.

Clearwire, a Kirkland startup founded by cellular pioneer Craig McCaw, will also receive an investment from Trilogy Equity Partners, led by U.S. wireless industry veteran John Stanton.

Kansas-based Sprint Nextel Corp. will be majority owner with a 51 percent equity stake, while existing Clearwire Corp. shareholders will receive about 27 percent interest.

The new company is looking for a U.S. network deployment reaching 120 million to 140 million people by the end of 2010. Company officials said they’ll need up to $2.3 billion more from additional investors or by borrowing. They also could simply shrink the network.

Both companies have separately pursued rolling out WiMax networks. They characterized their joint venture as a way to speed development and adoption of the technology, which could eventually compete with fixed-line broadband.

“The agreement enables us to get to market faster and reach a broader audience than we could have if we went alone,” Dan Hesse, Sprint Nextel’s chief executive officer, told analysts during a conference call Wednesday.

Rivals such as AT&T Inc. and Verizon Wireless have eschewed WiMax, opting for upgrades to their current wireless broadband networks and a future technology called Long Term Evolution. But Hesse said WiMax is available now and should give the new company a two-year head start in the “fourth-generation,” or 4G, telecommunications market.

Clearwire will sell WiMax services back to Sprint and the cable partners through a “mobile virtual network operator,” or MVNO, business model. There are no plans, however, to offer similar access to service providers not part of the venture.

The cable companies and Clearwire will also receive current-generation wireless service, called 3G, from Sprint Nextel through a separate agreement.