They took it down to the wire, but Sprint Nextel (NYSE:S, news, filings) and clwr have made peace again. Clearwire will make the $237M debt payment that they had threatened to default on, and Sprint has offered them up to $1.6B in funding and payments for services, although not all at once and with strings attached of course.
Clearwire will receive $926M from Sprint for unlimited WiMAX services, 2/3 of which will come in 2012 and the rest in 2013. Beyond that the agreements establish long term usage-based pricing into 2014 and beyond with the WiMAX network expected to remain in place through 2015. Meanwhile, the two companies will work together to overlay LTE on Clearwire's current infrastructure, which Sprint will of course have access to as part of its own buildout. Sprint will pay $350M in prepayments for up to two years for those LTE service once Clearwire achieves certain build-out targets by 2013.
However, Clearwire still needs more funding to start its LTE buildout - notice that none of that last paragraph was actually about new funding but about compensation for wholesale services that haven't happened yet. Today's agreements merely flesh out later payments by Sprint, which while definitely needed do not perhaps pay for as much in the short term. Sprint has, however, committed to step in with additional equity funding to match what Clearwire raises to maintain its current ownership level, participating up to $347M if Clearwire can raise between $400M and $700M.
Clearwire will now surely be trying to raise that outside money, which would give them enough to start their buildout. But for now this particular artificial deadline has been pushed down the road a ways. At least this particular cage match is over, time to start posturing for the rematch in the Spring.
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