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Clearwire announces $1.1 bln debt offering, Wi-Fi modem

A month ago WiMax operator Clearwire announced it was laying off 15 percent of its workforce and taking other cost-cutting measures as it looked to secure additional funding to continue building out its 4G WiMax network. Now, the company has come forward with a plan to raise additional capital: it will be offering over $1.1 billion in debt securities through a series of private transactions. The company plans to offer $500 million in debt that’ll come due in 2040 (with initial purchasers given an option to buy up to $100 million more), with another $175 million in first-priority secured notes that come due in 2015.

Sprint Nextel is Clearwire’s majority stakeholder, although Comcast, Time Warner Cable, Google, and Intel also have significant shares in the company. Clearwire has been pursuing many potential funding sources, but a debt offering is a good indication that Clearwire was not able to attract additional investors to help build out its WiMax network. Industry reports had Clearwire talking to T-Mobile about a possible investment.

A real question is how far Clearwire can get on $1.1 billion, Although the company claims its WiMax service now covers 103 million people (and it just lit up major markets like New York City and Los Angeles, which should boost revenue), some estimates place the cost of completing Clearwire’s WiMax network as high as $3 billion—and that doesn’t include the possibility of adding LTE capability to the network.

On a separate note, ClearWire has also announced its new Clear Modem with Wi-Fi, combining 4G WiMax service with integrated 802.11b/g/n Wi-Fi, enabling users to hook up their home networks (wirelessly) to Clearwire’s 4G WiMax service, which offers download speeds of 3 to 6 Mbps and bursts up to 10 Mbps. The modem is available now from Clear retail stores and authorized dealers for $120, or it can be leased for $7 per month. Data service plans start at $35 per month, and home service customers can add voice service (and unlimited long distance to the U.S., Canada, and Puerto Rico) for $15 more per month.

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Geoff Duncan
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