History
Clearwire traces its roots to 1998, when Sierra Technologies, Inc. spun off certain assets to form a new company, Clearwire, Inc., based in Arlington, Texas. Clearwire Technologies was formed by a number of investors including Sierra CEO Jim Gero and Edward "Rusty" Rose, a former co-managing partner of the Texas Rangers. Clearwire Technologies raised about US$100 million from Goldman Sachs, in conjunction with another client who held licenses for spectrum allocated to various educational institutions; the former Instructional Television Fixed Service (ITFS) band now known as EBS or Educational Broadband Service.[8]
After Goldman provided the funds—which were supposed to be used to roll out the system in key markets across the U.S.—they used a provision of the agreement to take control of the company; hiring a new CEO, Leo J. Cyr, who ousted the entire management team, including Clearwire CEO Brian Nerney, while diluting the strength of the founders still on the Board of Directors. A holding company controlled by Craig McCaw, Flux LLC, acquired Clearwire Inc's then parent company, Clearwire Holdings, in March 2004. After assuming control, McCaw installed executives from McCaw Cellular in the key leadership positions at Clearwire Corp.[8] On June 3, 2004, McCaw purchased Clearwire Inc. for an undisclosed amount and used its name and resources, as well as technology developed by another McCaw-owned company, NextNet Wireless Inc., to launch his latest effort.[9] On October 26, 2004, Intel Corp. teamed up with McCaw to develop and deploy a technology for portable wireless Internet access. The partnership included an investment by Clearwire Corp.[10]
Clearwire grew from 1,000 customers in September 2004 to more than 443,000 customers by May 2008.[11] Clearwire claimed in September 2006 that 20% of its markets had more than 10% penetration of households covered.
Clearwire took a $900 million infusion of capital from Intel and Motorola in July 2006, shortly after pulling its initial public offering.[12] Clearwire's equipment manufacturer Nextnet Wireless was sold to Motorola as part of the exchange.[13] This investment by these two industry giants had been reported as an attempt to accelerate the development and deployment of WiMAX networks worldwide.
An unspecified source claims that AT&T sold Clearwire a slice of 2.5 GHz spectrum for about $300 million. The spectrum covers markets in the southeast of the U.S. and was formerly owned by BellSouth. The spectrum solidifies Clearwire's position as the second largest holder of 2.5 GHz spectrum after Sprint Nextel. AT&T had to sell the spectrum as a condition of its merger with BellSouth.
Clearwire and Sprint Nextel announced a partnership in July 2007 to accelerate deployment of WiMAX technology across the US.[14] The deal was to include a swap of spectrum and markets between the two companies, as well as providing roaming capabilities for customers traveling between the companies' networks. The partnership was terminated at the end of 2007.[15] In 2008, Sprint's new CEO Dan Hesse started serious discussions about forming a joint venture between the two companies in the hopes of bringing in outside funding from Google, Intel, and Best Buy.[16] On March 26, 2008 an anonymous source stated that Sprint and Clearwire may get as much as $1 billion from Comcast and $500 million from Time Warner Cable in financial backing.[17]
Clearwire filed for its initial public offering with the Securities and Exchange Commission in May 2006. The company's underwriters included Merrill Lynch, Morgan Stanley and JPMorgan Chase. Trading began March 8, 2007 under the ticker symbol "CLWR" on the Nasdaq. Clearwire offered 24 million shares at $25 a share, and raised approximately US$600 million.[18] Before the Sprint merger, Craig McCaw was the largest shareholder of the company with a majority of the shares.[19]
On May 7, 2008, Clearwire and Sprint Nextel's wireless broadband unit Xohm announced their intent to merge, combining Sprint's 4G WiMAX network (Xohm) with Clearwire's existing pre-WiMAX broadband network. Sprint owns 54% of the firm,[20] with ex-Clearwire shareholders owning 27% – a consortium of Comcast, Time Warner Cable, Intel, Google, and Bright House Networks invested $3.2 billion and owns the balance.[21] Clearwire and the cable companies will buy 3G mobile broadband from Sprint as MVNOs. Clearwire/Sprint Nextel officially launched Portland, Oregon, as the first market using the new service. Clearwire's 4G service was branded as CLEAR,[22] except in those markets where the Clearwire name has already been established and where CLEAR service is not available.[23]
On March 9, 2009, Clearwire named Bill Morrow as CEO, succeeding Benjamin Wolff, who became co-chairman with Craig McCaw. Morrow, 49, stepped down as CEO of Pacific Gas & Electric Company. Morrow had previously held a number of senior positions at Vodafone.[24]
In April 2009, a class-action lawsuit was filed against Clearwire. The suit was dismissed in April 2009 but was appealed by the complainant. The suit claimed that the company's actual Internet connection speeds were slower than advertised and was sometimes unavailable.[25][26]
On December 31, 2010, McCaw resigned as chairman of Clearwire and was replaced by John W. Stanton.[27][28] On March 10, 2011, Bill Morrow resigned as CEO and was replaced by interim CEO John W. Stanton.[29] On August 10, 2011, Clearwire promoted COO Erik Prusch to president and CEO, and named John Stanton executive chairman.[30]
Clearwire stated that it might not honor a $237 million debt covenant due on December 1, 2011, in order to conserve cash.[31] However, on December 2, 2011, the company announced that not only had it made that payment, but it had made a new four-year deal with Sprint to receive funding for network buildout and investments valued at $1.6 billion.
Complete acquisition by Sprint Nextel
On October 14, 2012, it was announced that Japanese telecommunications company SoftBank would purchase 70% of Sprint Nextel Corporation for $20.1 billion.[32] This initially led to speculation that Sprint would buy out Clearwire, but "two well placed sources" within Sprint said that such a maneuver would not occur.[33]
Sprint, however, announced on October 18, 2012, that it acquired a majority interest in Clearwire by buying a stake from Clearwire's founder, which gave Sprint a 50.8% ownership and control of Clearwire.[34] On December 17, 2012, Sprint announced that it entered into a definitive agreement to acquire the remaining stake in Clearwire that it did not then own for $2.97 per share, which equaled $2.2 billion.[35]
Over a period of approximately six months, a bidding war with DISH Network for Clearwire occurred, ultimately resulting in Sprint increasing its offer price for Clearwire to $5 per share.[36]
