10 November, 2009
UPDATE 3-Clearwire raises more than $1.5 bln funding
Sprint to invest $1.176 bln; Comcast $196 mln
* Time Warner Cable to invest $103 mln, Intel $50 mln
* Clearwire shares up 6 pct, Sprint falls 5 pct
*
(Adds earnings results, share price, byline)
By Sinead Carew
NEW YORK, Nov 10 (Reuters) - Clearwire Corp (CLWR.O) said
on Tuesday that it would raise $1.564 billion from its current
investors including $1.176 billion from Sprint Nextel (S.N) to
help fund a high-speed wireless network it is building.
Along with Sprint and its cable partners, Clearwire, a
relative newcomer founded by wireless pioneer Craig McCaw, is
competing with the dominant U.S. mobile providers Verizon
Wireless and AT&T Inc (T.N) in the race to sign up consumers to
lucrative data services such as mobile Web surfing.
Sprint, the No. 3 U.S. mobile service and Clearwire's 51
percent owner, has been struggling to stem customer losses from
its own network, but it is banking on Clearwire's network for
its next generation of wireless data offerings.
Cable operators Comcast Corp (CMCSA.O) and Time Warner
Cable (TWC.N) will invest $196 million and $103 million,
respectively. These companies rent space on Clearwire's network
to offer high-speed wireless services. Chip maker Intel Corp's
(INTC.O) contribution to Clearwire will be $50 million.
Soleil/Nelson Alpha Research analyst Michael Nelson said
the funding was good news for Clearwire but noted that it was
less than half of a total $3.4 billion in funding that he
estimates the company will need by 2013.
Nelson said in a research note that he has "significant
concerns regarding Clearwire's business model and cash burn in
the face of a weak macro environment."
Also on Tuesday, Clearwire reported a third-quarter loss
that was in line with Wall Street expectations and revenue that
was stronger than expected. It also said it expects to add as
many new customers in the current quarter as added in the first
three quarters of the year combined. [ID:nN10332761]
However, some investors were disappointed that the company
said it expects a cash spend at the high end of its guidance
for the full year 2009.
Clearwire, which is using an emerging technology known as
WiMax, reiterated its plan to expand its network to cover 40
million potential customers by the end of this year and to
cover 120 million people by the end of next year.
Clearwire said it would get about $1.057 billion in cash
from equity financing within five business days and $440
million by year-end, with the remaining $66 million to be
funded during the first quarter of 2010.
Clearwire also said it would launch an offer of a minimum
of $1.45 billion in senior secured notes and would use net
proceeds to pay off its existing $1.40 billion credit
facility.
In the latest funding round, Craig McCaw's investment firm
Eagle River Holdings will also give Clearwire $20 million in
new funding and Bright House Networks will contribute $19
million. All the participants will get newly issued shares
priced at $7.33 per share in exchange for their investments.
Clearwire shares fell 1.3 percent in late trade after
closing up 45 cents or 6.6 percent at $7.25 in the regular
Nasdaq session. Sprint shares finished off 19 cents or down 5.5
percent at $3.24 on New York Stock Exchange, where they had had
closed up 20 percent the day before.
Clearwire option volume was four times the average daily
turnover with investors showing interest in November, March and
June call options at the $7.50 strike by midday.
Investors are buying these calls in anticipation that the
stock might move beyond $7.50, said Frederic Ruffy, options
strategist at WhatsTrading.com.
Verizon Wireless is owned by Verizon Communications (VZ.N)
and Vodafone Group Plc (VOD.L).
(Additional reporting by Doris Frankel in Chicago; Editing by
Lisa Von Ahn, Tim Dobbyn and Matthew Lewis)
Source: http://www.reuters.com
UPDATE 3-Clearwire raises more than $1.5 bln funding Added: (10.11.2009)
Back to invest list
