Investing

WiMax Nation: Clearwire (CLWR) And Sprint (S) Link Up

Sprint (S) and Clearwire (CLWR) are both making substantial bets on WiMax networks that will allow handsets and PCs to get over-the-air broadband over an extremely wide geographic area. But, neither company has access to vast pools of capital. One analyst suggested that Clearwire would have to raise another $5 billion to build a national footprint. Sprint is spending $3 billion to create a network that will cover 100 million people in the US.

The two companies appear to be close to partially solving one another’s problems by setting up a joint roaming agreement. Sprint customers will be able to use Clearwire signals when they are in Clearwire’s territory and visa versa.

If WiMax works well, it poses a competitive threat to the 3G networks being set up by AT&T (T) Wireless and Verizon Wireless. WiMax is faster and works easily with a broad number of devices. It is also not based on Qualcomm’s (QCOM) 3G technology so it may be trouble for that company’s US revenue base.

Sprint has been the cellular service whipping boy over the last two years. As AT&T and Verizon has added subscribers and made buckets of money, Sprint has struggled integrating NexTel, a wireless company it bought to expand its subscriber base, especially among business users. Sprint’s shares are only up 15% over the last year, while AT&T’s are up about 45%.

The perception of Clearwire’s opportunities have been so poor that the stock is flat over the last year.

If WiMax is as good as advertising, the national network set up by Clearwire and Sprint is a real threat to their larger competition.

Douglas A. McIntyre can be reached at [email protected]

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