Sprint Reconsiders WiMax Plans

Sprint Nextel Corp. (NYSE: S) has confirmed reports that its WiMax partnership with broadband wireless service provider Clearwire LLC (Nasdaq: CLWR) has been scrapped and that it's now reviewing its business plans. (See Report: Sprint & Clearwire Split.)

Under the terms of the companies' original agreement, announced in July, Sprint and Clearwire had planned to split deployment of WiMax in the U.S. between them -- with Sprint handling around 65 percent of the buildout and Clearwire the other 35 percent. (See Clearwire & Sprint Team on WiMax.)

Sprint says it still plans to build out WiMax infrastructure and launch services in 2008, though the extent of its plans are now unknown.

In a statement issued early Friday morning, Sprint said the two companies had "mutually agreed to terminate the Letter of Intent (LOI) signed in July 2007."

The statement added: "The two companies could not resolve complexities associated with the LOI and failed to reach final agreement on the terms of the transaction."

Clearwire stated in its third-quarter results release, issued this morning, that the relationship as set out in the LOI was "likely to introduce a level of additional complexity to each party’s business that would be inconsistent with each company’s focus on simplicity and the customer experience."

Sprint, though, says it's not scrapping its WiMax rollout plans altogether. The carrier says it is "fully committed to developing WiMax services and deploying a WiMax network."

However, it hasn't said whether it is still planning nationwide U.S. coverage. "In light of this announcement, Sprint is reviewing its WiMax business plans and outlook and the company expects to comment further on these topics early next year," the operator added.

And future collaboration with Clearwire is still in the cards. "Sprint expects to continue to work together with Clearwire on future opportunities to enhance the deployment of robust WiMax capabilities through ongoing discussions that include the possibility of roaming, frequency interference coordination, spectrum exchanges, technology evolution and development and network standards," the carrier noted.

Keith Cowan, Sprint's president of strategic planning and corporate initiatives, stated: "We are on track for soft launch late this year in the Chicago and Baltimore/Washington markets and commercial launch in 2008. In line with Sprint's mandate of improving the customers' experience and simplifying our operations, we look forward to working with Clearwire on opportunities such as roaming and standards."

The carrier said it will retain its Xohm services brand and will continue to work with its existing technology partners -- Intel Corp. (Nasdaq: INTC), Motorola Inc. (NYSE: MOT), Nokia Corp. (NYSE: NOK), and Samsung Electronics Co. Ltd. (Korea: SEC). In addition, Google (Nasdaq: GOOG) will still develop a services portal for Sprint's WiMax customers. (See Sprint's Ready to XOHM Out, Sprint & Samsung in NYC WiMax Push, Sprint & Google: Max Headroom, and Sprint Updates on WiMax.)

Sprint's stock closed Thursday at $16.54. Clearwire's share price closed Thursday at $18.03.

Clearwire this morning reported revenues of $41.3 million and a loss of $84 million in its third quarter. The service provider said it added 49,000 new customers in the quarter, taking its total to 348,000.

— Ray Le Maistre, International News Editor, Light Reading