The Bell Letter Blog Mergers and Acquisitions Sprint to spin XOhm into Clearwire; lands Google, Intel, Comcast, Time Warner as minority investors | Sprint to spin XOhm into Clearwire; lands Google, Intel, Comcast, Time Warner as minority investors |
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| Tuesday, May 06, 2008 | |
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The "super news" the WiMax industry has been waiting for appears to be on the way later this year:
summary Wall Street Journal article: Tech Firms to Build WiMax Network in U.S.
This $3.2B proposed cross-sector tech investment banking deal and joint venture announced May 7 2008 is to be consummated this fall after regulatory review, will allow Sprint to spin XOhm into Clearwire, gaining majority 51% ownership while also receiving financial backing from partners Google, Intel, Comcast, Time Warner Cable, and other important backers. This is the most interesting large-scale tech deal of 2008, barring the failed Microsoft-Yahoo discussions, with potentially a huge 5-10 year impact on growth across most the big tech sectors. Keep in mind though - it is still only a proposed deal, not a done deal! It is easy to lose sight of that while reading about it in the financial media.  Sprint  Google  Comcast The firm will be called ("the new") Clearwire, and is pending regulatory review and resolution of lawsuits filed by Sprint partners after the deal was announced. A total of $3.2B in new investment capital will be paid into Clearwire to create a new, publically-traded Clearwire which is valued in this transaction at $12B. The new Clearwire, with Craig McGaw as Chairman and Barry West, Sprint's WiMax visionary as CEO, plans to build out a nationwide U.S. WiMax network, which will use existing Sprint cell towers and some of Sprint's network management infrastructure (details pending from Sprint). This deal, if it is consummated later this year as planned, should change the equation for WiMax technology, which despite strong industry spin to the contrary, has been struggling mightily to get off the ground. It is also a brilliant M&A manuver by Sprint's new CEO Dan Hesse, famed for past key manuevers in consumer cellular marketing pricing plans. Google wins a preferred spot on a nationwide WiMax deployment. Time Warner wins a wireless entre' against AT&T and Verizon which have been coming after them with video services. Sprint gets a big financial problem and risk off it's back (funding XOhm) by trading XOhm in for a 51% majority interest in Clearwire. The WiMax vendor community scores it's biggest win since the debut of WiMax technology. The biggest winner: Broadband data users in the US! The losers? AT&T and Verizon, who have tried to slow down the move to 4G with their LTE initiative. Touche', Sprint Clearwire and partners - very impressive! Now that there is a credible roadmap for a nationwide WiMax network to emerge, assuming everything comes together here, the question becomes: will it work? both at a business level, and a technical level. There are an immense array of issues, which I've beeing looking into and will start to examine one by one on my blog. Is $3.2B enough to blanket half the country in broadband? Will US consumers really be ready to gear up with WiMax modems, in line with Intel's WiMax vision? Can the service be priced in a way to make money quickly enough? Will mobile WiMax "work" in the extraodinarily difficult urban RF environment, where Metro Wi-Fi failed? Can McGaw and West create and execute a business plan that makes the new Clearwire a success? And that's just the start of it.We'll be on top of this one, because the ramifications to all of tech could be enormous. |
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