Sprint today threw Kirkland’s Clearwire a lifeline – or did Clearwire throw Sprint a lifeline?
The companies disclosed that they’re working together to upgrade Clearwire’s 4G wireless network to the LTE standard, which Sprint plans to begin using in 2013.
“The plan is right now – it hasn’t been announced officially, and we’re still working through it – but you’re right to think of 2013 as the period of time Clearwire LTE capacity would begin to come on, that we would use Clearwire’s LTE capacity to augment our own network capacity going forward,” Sprint Chief Executive Dan Hesse said this morning in a conference call with analysts.
Clearwire still needs $900 million for the LTE project and Sprint is having to borrow more money for itself, much less its needy stepchild in Kirkland. But having a key customer signed should help Clearwire line up the financing it needs.
Just a few weeks ago Sprint was indicating that it was looking for additional LTE capacity from a different wholesale provider, LightSquared. But LightSquared is still trying to get regulatory approval for its spectrum plan that will interfere with GPS devices.
Hesse today clarified things a bit. He said Sprint’s own spectrum capacity will take it to 2014. A deal with Lightsquared would give Sprint one year of additional LTE capacity.
Clearwire offers “additional years – plural – to that capacity,” he said.
“Really nothing has changed, we just make progress,” he said. “If LightSquared comes online that gives us another potential use of capacity but we’re making very good progress, we believe, on the technical front with Clearwire and I’ll leave it at that.”
Sprint hasn’t finalized the new deal with Clearwire but it’s on track. Sprint disclosed that they’ve signed a memorandum of understanding, and Hesse said it should lead to LTE service beginning in 2013.
Since the iPhone is now Sprint’s flagship device on which Hesse’s betting the company, the deal suggests there will be an LTE iPhone available from Sprint in 2013. Presumably there will be LTE iPhones available from Verizon and AT&T – which are already running LTE networks – sometime in 2012.
Clearwire’s stock jumped 22 percent to $2 today, but it’s still well below it’s $7.40 peak over the last year. Nor has it recovered from the plunge after Clearwire’s last earnings report in August, when it disclosed plans to switch to LTE. Before that news it had closed at $2.47.
Sprint, meanwhile, is down 4 percent to $2.60 at last check.