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Sprint will own 51% of the new Clearwire company

When Sprint first began to talk about its plans to invest $5 billion in a nationwide WiMAX network dubbed Xohm, people were excited. Then the reality of the huge cost to set up the network and financial issues with Sprint led to the realization that Sprint promised more than it could deliver.

Sprint’s WiMAX service was scaled back and delayed repeatedly due to the company’s inability to fund the project and the loss of subscribers. In the end, the best Sprint could do was produce a limited soft launch in three major cities in America.

Today Sprint announced a new agreement with Clearwire Corporation that will allow the combination of the two companies WiMAX broadband business into a new wireless company. The new company will carry the Clearwire name and will expedite the rollout of a nationwide WiMAX network.

The announcement also made public that the new company has five major technology companies as investors including Intel, Google, Comcast Corporation, Time Warner Cable, and Bright House Networks. Together these companies have agreed to invest $3.2 billion into Clearwire to fund the WiMAX rollout.

The $3.2 billion investment from the five companies will get the investors shares of Clearwire stock at a target price of $10 per share, subject to post-closing adjustment. The adjustment is to be based on 15 randomly selected days during the 30-day trading period ending on the 90th day after closing. The price per share for the stock has a cap of $23 per share and a floor of $17 per share. Trilogy Equity Partners has also announced it will invest directly in Clearwire stock.

Once the transaction is complete Sprint will hold on to the majority share of the new company with a 51% ownership and the other five new investors will hold 22% of the company as a group. Existing Clearwire shareholders will own 27% of the company.

Dan Hesse, president and CEO of Sprint said in a statement, “For Sprint shareholders, this is an opportunity to unlock and bring visibility to the value of our significant spectrum assets, technology and expertise, by leveraging the technology, applications and distribution strengths of our investors, who together command nearly a half- trillion dollars in market capitalization. We’ve made an excellent start developing XOHM WiMAX services. Contributing those advances to a strongly backed new company – in which we’ll hold the largest interest – provides Sprint with additional financial flexibility and allows Sprint management to leverage and focus on our core business.”



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Wait for it...
By Bender 123 on 5/7/2008 12:47:23 PM , Rating: 2
This is great news, the cable cos and DSL providers will be very happy the new tubes are run by Sprint...Their customer service (I deal with Charter...sigh...)looks like masters in comparison to my experience with "Jimmy" and "Sandra" from Sprints fantastic Iowa (errr...Bangladesh) call center...




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