Another $1.5B for Clearwire

What’s that old saying?  In for a penny, in for a pound…  Apparently it scales all the way up to the billions.  According to the Wall Street Journal over the weekend, the backers of clwr are preparing another $1.5B to fund its network buildout.  Sprint Nextel (NYSE:S, news, filings) is supposedly putting up about $1B, while a supporting cast of Intel, Comcast, TW Cable, and Bright House would be putting up another $500M.  Is this a real rumor?  It likely is.  While Clearwire could slow their buildout they clearly don’t want to.  Strategically it’s a no-brainer for both themselves and their backers, if they weren’t willing to take this step then they should never have taken the first one.  The future is no sure thing, but failing to feed the capex monster now would drastically reduce the chances of success.

For most of the last year, the mantra of the anti-Wimax crowd has been that Clearwire didn’t have enough money to finish what it has started.  Is $1.5B enough to shut them up?  Probably not, I give it 24 hours (probably less) before some analyst issues a report or tech note emphasizing their need for another $2-3B.  But it is enough to keep the Clearwire snowball rolling, and it just might start to pick up speed on its own next year as coverage expands.

Clearwire has been rolling out new markets this fall followed by Sprint in the same markets, I haven’t said much because I felt like a broken record.  Suffice to say they have been gaining momentum in their buildout.  However, what we are looking for in the next quarter or two is signs of success in the markets they opened earliest – Baltimore, Atlanta, Portland, Las Vegas.  Build it, and they will come – so are they coming?  Hmmm, I wonder what Clearwire’s Q3 will look like. 

If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!

Categories: Financials · Wireless