KIRKLAND, Wash.—Clearwire Corp., the broadband wireless company founded by Craig McCaw, will rake in $900 million as part of a series of transactions with Intel Corp. and Motorola Inc., the company announced.
The news coincided with Clearwire halting its planned $400 million initial public offering, which it filed in May.
Clearwire, Intel and Motorola said the transaction will ultimately accelerate deployment of 802.15e-2005-based mobile WiMAX networks and technology. Clearwire is in the process of migrating its networks to mobile WiMAX technology.
Under Clearwire’s deal with Intel, Intel will invest $600 million into Clearwire. The investment, which Intel said is its largest investment ever, helps to promote the deployment of WiMAX technology—as well as the sale of Intel’s WiMAX chips. Indeed, Clearwire previously announced plans to use Intel’s WiMAX equipment.
As for Motorola, the company is essentially paying $300 million to buy Clearwire’s NextNet Wireless Inc., which is an equipment supplier that Clearwire purchased in order to control the development of its network infrastructure. NextNet makes non-line-of-sight equipment based on Orthogonal Frequency Division Multiplexing technology, which is the underlying technology of WiMAX. Going forward, Clearwire said it plans to use Motorola equipment to build out its broadband wireless networks.
Clearwire currently offers high-speed wireless Internet service in 27 markets.
During an interview with RCR Wireless News, Scott Richardson, vice president and general manager of Intel’s Service Provider business group, pointed out that Intel’s WiMAX strategy is similar to its successful Wi-Fi strategy of investing in Wi-Fi players, which resulted in “making Wi-Fi synonymous with Centrino.”
The Clearwire investment “is the largest single investment that we’ve ever done,” he said. “We put money into players in the ecosystem that help facilitate our technology position.”
Richardson added that he expects to see significant WiMAX adoption in 2007 in both emerging and mature markets. He said fixed WiMAX will likely be adopted in emerging markets like China and India, while mobile WiMAX likely will take off in mature markets throughout Western Europe as well as in large Asian cities.
“Mobile WiMAX as a standard is moving along very quickly, but it can take multiple years to build out the infrastructure for a new technology. This announcement signifies that two big companies, Intel and Motorola, are committed to WiMAX. Clearly, Intel cannot meet the demands of this market alone, so other deals like this are likely to follow.”
Still unclear is Qualcomm Inc.’s stake in the projected WiMAX proliferation. Since Qualcomm purchased OFDM developer Flarion, the company has signed a few royalty-bearing licensing agreements for WiMAX products. Further, Qualcomm has said it intends to collect royalties from a variety of WiMAX equipment vendors, vendors that could include Intel.
As for Clearwire, the privately held company has remained relatively quiet over the past few years. However, in its May IPO filing, the company highilghted a number of interesting facts:
-
In the markets where it has done business for more than six months, Clearwire has managed a penetration level of around 5 percent;
- As of March 31, the company counted 88,000 subscribers in the United States and 11,500 subscribers in Belgium and Ireland;
- The company’s network is designed to support “portable, and eventually mobile, wireless broadband services;”
- In April it began offering VoIP services, and Clearwire plans to offer other value-added services and applications “including enhanced mobility-based services, subscription-based technical support and other premium services;”
- The company scored revenues last year of $33.5 million and a net loss of $140 million;
- The company expects to expand into Seattle and Honolulu this year;
- And Clearwire counts about 760 employees.
