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February 18, 2011

Clearwire to Make Peace with Sprint Over Rate Charges

By Carrie Schmelkin
TMCnet Web Editor

There appears to be a cease fire between Clearwire (News - Alert) Corp. and Sprint Nextel over rate charges, as Clearwire Corp. is now more interested in expending its energy in boosting revenue as opposed to fighting.

"That is excellent to hear," said Roe Equity Research analyst Kevin Roe in a statement. "Getting (the Sprint (News - Alert) dispute) resolved is very important."

Clearwire and Sprint, Clearwire’s biggest customer and investor, have been contending over the rates Clearwire charges to Sprint, something which has hurt its revenue in recent quarters. But, after announcing its intent to resolve the conflict, shares in Clearwire - which is owned 54 percent by Sprint -rose two percent.

The high-speed wireless provider said in addition to resolving its Sprint argument, it is also interested in seeking additional funding and possibly selling assets including spectrum. Clearwire also stated that it is looking to double its subscriber base in 2011. It ended the fourth quarter in 2010 with 4.4 million subs, adding 1.5 million during the quarter."In 2010, we achieved our aggressive network expansion goals, grew our subscriber base at an incredible rate and solidified our position as a leader in the 4G industry in both network reach and customer growth,” said CEO Bill Morrow in a statement.

The Clearwire 4G mobile broadband network now reaches 119 million people in the United States and covers 71 of the top U.S. markets. Despite this, Clearwire is still looking to make improvements with its revenue, including the potential sale of its spectrum.

T-Mobile USA, a unit of Deutsche Telekom, may be the main bidder for the spectrum. Clearwire has also discussed the option for an equity investment from T-Mobile (News - Alert) USA in exchange for a wholesale agreement with that company.

Clearwire reported a fourth quarter loss of 53 cents per share, a penny better than the 54-cent loss analysts were expecting. Revenue totaled $180.7 million, below the Street target of $194.7 million. Average revenue per user (ARPU) was reported at $16.07.

As Clearwire waits for the dust to settle with its latest Sprint battle, Clearwire said it would set a "modest pace" for its retail growth efforts going forward in order to cut expenses, according to Yahoo News.

At the end of last year, Sprint Nextel decided not to purchase debt from Clearwire. The opportunity presented itself when Clearwire said it was raising over $1.1 billion, according to a company statement. The money was supposed to finance expansion of Sprint’s wireless broadband network.

Carrie Schmelkin is a Web Editor for TMCnet. Previously, she worked as Assistant Editor at the New Canaan Advertiser, a 102-year-old weekly newspaper, covering news and enhancing the publication's social media initiatives. Carrie holds a bachelor's degree in journalism and a bachelor's degree in English from the S.I. Newhouse School of Public Communications at Syracuse University. To read more of her articles, please visit her columnist page.

Edited by Carrie Schmelkin

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