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December 15, 2011

Clearwire Raises Another $734 Million for its LTE Network

Clearwire's goal of rolling out the nation's first wide-channel 4G LTE network became a bit more achievable this week when it raised a total of $734 million in funding from a public stock offering and a separate transaction with its majority owner, Sprint.

The Bellevue, Wash. company announced on Tuesday that it sold more than 200 million shares of Class A common stock at $2.00 per share, totaling net proceeds of $384.1 million after underwriter discounts and commissions. Clearwire also unloaded another 173 million shares of Class B common stock to Sprint for an additional $331.4 million.

The transaction with Sprint, which uses Clearwire's infrastructure to deploy its own 4G WiMAX services, was born from a Dec. 1 deal where Sprint agreed to provide Clearwire with as much as $1.6 million in equity over the next four years.

Under the terms of the deal, Sprint will maintain access to Clearwire's WiMAX network through at least 2015 Clearwire, meanwhile, has agreed to meet a number of build-out conditions by June 2013, according to the Motley Fool.

Clearwire said that it will use its new influx of cash for "general corporate and working capital purposes," which will include costs related to the deployment of mobile 4G LTE technologies. The funding will also help Clearwire cover maintenance and operating costs associated with its current mobile 4G WiMAX network.

"The added resources will enable us to continue delivering 4G mobile broadband service to meet the rapidly growing demand in the industry. We remain ideally and uniquely positioned to serve both wholesale and retail customers well into the future," Clearwire CEO Erik Prusch noted in a statement.

Although Sprint is the majority owner of Clearwire, the two companies have shared a number of tense moments in the past, including a long-running standoff that ended in April when they finally agreed on a new wholesale pricing deal. Clearwire and Sprint entered into arbitration in November 2010 after initial negotiations failed to result in an agreement.

Sprint is working on its own 4G network, but clearly still needs to maintain its relationship with Clearwire to compete with the likes of AT&T and Verizon, which each operate their own next-gen networks. However, most analysts expect the partnership will eventually erode over time, pending an acquisition.

Beecher Tuttle is a MobilityTechzone contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves

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