Sprint, Clearwire Plan to Team on LTE

By Josh Long

Sprint Nextel Corp.s recently announced plans to move its 4G network to another technology LTE or Long Term Evolution raised speculation that the nations third-largest wireless provider was going to cut loose from its partner Clearwire Corp., the operator of a WiMAX network.

That now seems less likely after Sprint Chief Executive Dan Hesse revealed Wednesday that the company had reached a non-binding agreement with Clearwire in connection with LTE.

As you should each understand it was necessary to reach this agreement in order to begin the negotiations of commercial terms under which Sprint may utilize and pay for access to the Clearwire LTE network,” Forbes quoted Hesse as saying on a call with investors following the release of Sprints third-quarter earnings. A definitive agreement would allow Sprint to meet its objectives to further improve the customer experience and to manage its next network cost by offloading some 4G usage from its own LTE network into the Clearwire LTE network and thereby benefit from Clearwires large, spectrum portfolio on a resell basis.”

Sprint plans to discontinue its WiMAX offerings by the end of next year, and it is estimated that the company will need to spend up to $5 billion over the next three to five years to upgrade its infrastructure and build an LTE network, according to Zachs Equity Research. Sprint, which has been losing money for years, said Wednesday it could need $7 billion in new financing over the next few years to cover a cash shortage caused by heavy investments in the introduction of Apples iPhone and its network upgrade, Reuters reported. Sprints partner Clearwire also plans to move to LTE. The company has announced a plan to overlay its WiMAX network with a Time Division LTE network for around $600 million, according to an August research note from J.P. Morgan. The wireless provider could start development next year, analysts with J.P. Morgan wrote, and complete the network in about a year.

Overland Park, Kan.-based Sprint and Bellevue, Wash.-based Clearwire have yet to reach a definitive and binding agreement in connection with LTE.

Clearwire, which is partially owned by Sprint, plans to release its third-quarter results on Wednesday, Nov. 2. Earlier this month, Clearwire said it expected to end the quarter with 9.5 million customers and post revenues of $332 million.