Clearwire Escapes Debt Default with Sprint Deal

Posted by at 11:29 am on December 1, 2011

Clearwire got a last-minute reprieve Thursday after Sprint confirmed a rumored last-minute financing deal. The 4G service is getting both debt assistance to pay off its $237 million owed on Thursday as well as up to $350 million to help Clearwire transition over to LTE. Under the new terms, most of the payments will come during 2012, although Sprint now also has to guarantee use of Clearwire’s outgoing WiMAX network through 2015 or later.

The LTE conditions require that Clearwire make certain deployment goals no later than mid-2013 and give Sprint certain pricing promises for when customers roam on its network. In return, Sprint should have smartphones and other devices using Clearwire’s TD-LTE the same year.

The funding escapes a potential crisis for both Clearwire and Sprint. Clearwire had considered defaulting on its debt because of its poor financial situation, which could in turn have dragged down majority stakeholder Sprint. The two have been dependent on each other to build out their 4G coverage and could equally have suffered.

LTE funding equally promises an improvement in the LTE landscape in the US. With a more stable position for both Clearwire and Sprint, the two can build out LTE faster and compete against better-funded AT&T and Verizon rollouts. It could lead to LTE iPads and iPhones, along with future Android devices, getting similar performance and coverage on at least three of the four major US carriers.

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