Monday, November 22, 2010

Will The Sprint – Clearwire Venture Survive?

Many saw this coming years ago when Sprint dumped their broadband wireless division and the $1B of spectrum they had (old MMDS). But Craig McCaw's wealth and deep pockets were/are behind Clearwire. He was behind Teledesic, the expensive low earth orbit adventure-flop. These things apparently are more like expensive hobbies to him!

The one to ponder is Sprint. My own opinion is that before Sprint bought Nextel, it was near collapse. The acquisition gave them a honeymoon with the investment world. Then Sprint needed another dodge. Their merger with MCI flopped, and good thing it did, as Mr. MCI went to prison. Now the WiMax adventure by Sprint, XOhm tries to apply the $B debt they have on the books from the MMDS spectrum acquisitions of many tiny licensees. MCI had the rest of the spectrum in the US, for WiMax in 2.5GHz.

Then the march to LTE by everyone except Sprint (and Xohm/Clearwire) came to light.

Poor Sprint - they are CDMA as is Verizon. But Verizon doesn't want to pay much for Sprint's network or spectrum- Verizon doesn't need it unless it was a a fire sale price. Which it may be.

If Clearwire tries a metamorphosis from WiMax (16e) to LTE, they would recapitalize their WiMax system to LTE before even finishing a national launch! This sounds like how AT&T Wireless (SBC-renamed) has operated since deregulation: Technology du jour.

So don't rush out and buy any Sprint stock.

For more on this situation check out this article at MuniWireless:

Clearwire In Deep Financial Trouble …. May Not Survive

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