Sprint Makes it Pretty Clear: Clearwire on Its Own

10/7/11Follow @curtwoodward

Sprint (NYSE: S) is unveiling a new plan to upgrade its national wireless network today, and Kirkland, WA-based Clearwire is not part of the picture. That’s sent shares of Clearwire (NASDAQ: CLWR) into a nosedive, losing a third of their value in afternoon trading.

It had previously seemed that Sprint, as the majority shareholder, might have to play a key role in helping Clearwire remake its own network. Clearwire is a wholesale provider, but its early fourth-generation (or 4G) network is based on a kind of wireless technology called WiMax—and WiMax is quickly being displaced as long-term evolution, or LTE, becomes the industry standard.

Clearwire has said it needs close to $1 billion for its network upgrade—some $600 million to add LTE, with another $300 million or so to finish work on its existing WiMax infrastructure. But today, Sprint announced a $5 billion plan to upgrade its own network. And an investment in boosting Clearwire wasn’t part of the plan.

Even before today, Sprint had been sending increasing public signals that Clearwire is basically on its own. And the company hammered home the point even further today: As the Puget Sound Business Journal reports, Sprint said it wouldn’t offer Clearwire-compatible phones after next year, and CEO Dan Hesse said Sprint had “nothing beyond 2012 to announce” about network arrangements with Clearwire.

There’s also this Associated Press report on the analyst and investor meeting, which includes this key scene of Hesse basically pooh-poohing Clearwire’s situation:

“In a testy exchange with Sprint executives, a member of the audience at the investor meeting questioned why Sprint would risk forcing Clearwire to seek bankruptcy protection when it owns 54 percent of the company, and could lose its share of Clearwire’s spectrum in a bankruptcy case.

Sprint executives didn’t directly address that possibility, but Hesse noted that no bankruptcy case involving a wireless company has resulted in a disruption of service.”

Clearwire’s response was similar to the notes it’s sounded recently: Despite all the turmoil, it has lots of spectrum, and “Sprint remains dependent on Clearwire for 4G” today.

“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,” the company said in a statement.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

By posting a comment, you agree to our terms and conditions.