Sprint and Clearwire are scrapping their agreement to jointly build a nationwide WiMAX network, The Wall Street Journal reported on its Web site.
Sprint and Clearwire agreed in July to connect their WiMax networks, share costs, and offer services to about 100 million people by the end of 2008, explains Gizmodo. But, according to the Journal, the complexities of the transaction and the departure last month of Sprint CEO Gary Forsee made it too difficult to reach a final agreement.
Sprint has said it would spend $5 billion by 2010 on WiMax, and acting Sprint CEO Saleh said last week there had been no change to the company’s plans for the next-generation network.
If the partnership unravels, it would be a blow for Clearwire, observes C/Net. The Sprint deal would have helped Clearwire expand its geographical reach without huge buildout costs. Clearwire raised $600 million in March by selling 24 million shares to the public at $25 each.
According to the report, it is unclear whether Sprint and Clearwire would pursue another arrangement. Together the two companies control complementary swaths of radio spectrum around the United States and are the only two major U.S. carriers pursuing WiMax.
UPDATE: Clearwire reported third quarter 2007 results on Friday. Clearwire reported 348,000 subscribers, up from 162,000 at the end of Third Quarter 2006, with an adjusted EBITDA loss of $84.1 million in the third quarter of 2007 compared with an adjusted EBITDA loss of $23.3 million in the third quarter of 2006.
The quarterly report also says:
Clearwire and Sprint concluded that the joint build transaction originally contemplated by the previously announced letter of intent was likely to introduce a level of additional complexity to each party’s business that would be inconsistent with each company’s focus on simplicity and the customer experience. Consequently, the parties have agreed to terminate their obligations under the letter of intent, although discussions continue regarding the best means to accomplish the benefits that were expected under the letter of intent. Notwithstanding the ongoing discussions, there can be no assurance that a transaction or agreement between Clearwire and Sprint Nextel will be concluded.
The Seattle Times asks, Could Clearwire be partnering with Google?
Wolff said that he can’t talk about any transactions publicly until they are complete, but that in general “I would say that there are a number of factors that caused an increased focus on the space that we are in,” he said. “We are looking and exploring all of our strategic options and there’s a quite a bit of focus on this space right now.”
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