Sprint and Clearwire to Combine WIMAX Businesses, Creating A New Mobile Broadband Company
Intel, Google, Comcast, Time Warner Cable and Bright House Networks to Invest
$3.2 Billion in Combined Company, at Target Price of $20.00 per Share
Formation of New Company Brings Together the Nation’s Leaders in Communications,
Technology Innovation and Entertainment
New Company to Speed Deployment of First Nationwide Next-Generation
Mobile WiMAX Network
Transaction Designed to Unlock the Potential of Clearwire’s and Sprint’s 4G Assets
New Company to be Led by Seasoned Management Team from Clearwire and Sprint’s
XOHM Business Unit; Board of Directors to Include Leading Wireless
and Cable Executives
Clearwire Corporation (NASDAQ: CLWR) and Sprint Nextel Corporation (NYSE: S) today announced that they have entered into a definitive agreement to combine their next-generation wireless broadband
businesses to form a new wireless communications company.
The new company, which will be named Clearwire, will be focused on expediting the
deployment of the first nationwide mobile WiMAX network to provide a true mobile broadband
experience for consumers, small businesses, medium and large enterprises, public safety
organizations and educational institutions. The new Clearwire expects to dramatically enhance
the speed and manner in which customers access all that the Internet has to offer at home, in
the office and on the road.
Sprint and Clearwire also announced today that five innovative technology, content and
communications leaders – Intel Corporation (NASDAQ: INTC) through Intel Capital, Google Inc.
(NASDAQ: GOOG), Comcast Corporation (NASDAQ: CMSCA, CMCSK), Time Warner Cable
Inc. (NYSE: TWC), and Bright House Networks – have collectively agreed to invest $3.2 billion
into the new company. The investment by the five strategic investors will be based on a target
price of $20.00 per share of Clearwire’s common stock, subject to a post-closing adjustment.
This adjustment is based upon the trading prices of new Clearwire common stock on the
NASDAQ Market over 15 randomly selected trading days during the 30-trading day period
ending on the 90th day after the closing date. The price per share will be based upon the
volume weighted average price on such days and is subject to a cap of $23.00 per share and a
floor of $17.00 per share. In addition, Trilogy Equity Partners, led by wireless veteran John
Stanton, will invest directly in the new Clearwire’s common stock.
Upon completion of the proposed transaction, Sprint will own the largest stake in the new
company with approximately 51 percent equity ownership on a fully diluted basis assuming an
investment price of $20.00 per share. The existing Clearwire shareholders will own
approximately 27 percent and the new strategic investors, as a group, will be acquiring
approximately 22 percent for their investment of $3.2 billion, both on a fully diluted basis
assuming an investment price of $20.00 per share.
Sprint and Clearwire also announced a series of commercial agreements with the strategic
investors, including 3G and 4G wholesale agreements.
“For Sprint shareholders, this is an opportunity to unlock and bring visibility to the value of our
significant spectrum assets, technology and expertise, by leveraging the technology,
applications and distribution strengths of our investors, who together command nearly a halftrillion
dollars in market capitalization,” said Dan Hesse, president and chief executive officer of
Sprint. “We’ve made an excellent start developing XOHM WiMAX services. Contributing those
advances to a strongly backed new company – in which we’ll hold the largest interest – provides
Sprint with additional financial flexibility and allows Sprint management to leverage and focus on
our core business.
“Additionally, the agreements allowing the new company and our cable company investors to
bundle and resell Sprint’s third-generation wireless services strengthen the distribution of our
current services while reducing the complexity and enhancing Sprint’s cable relationships,”
Hesse added.
Clearwire Chairman Craig O. McCaw, said, “The power of the mobile Internet, which offers
speed and mobility, home and away, on any device or screen, will fundamentally transform the
communications landscape in our country. We believe that the new Clearwire will operate one
of the fastest and most capable broadband wireless networks ever conceived, giving us the
opportunity to return the U.S. to a leadership position in the global wireless industry.
Benjamin G. Wolff, chief executive officer of Clearwire, said, “The combination of robust nextgeneration
mobile WiMAX technology and nationwide spectrum that we believe is optimal for delivering mobile broadband services – coupled with substantial new financial resources, a team of experienced wireless industry veterans, and distribution and technology agreements with some of our nation’s leading communications, technology and content companies – creates what I believe to be a once-in-a-lifetime opportunity.
"Given the complexity of this transaction, we have taken the time and effort to do it right, by thoughtfully leveraging the resources and opportunities that we and our investors are bringing to the table. This transaction is tremendous news for the entire Clearwire team – our shareholders, our customers and our employee-partners, and we look forward to partnering with the talented team from XOHM to achieve our shared vision,” Wolff added.
The strategic investors are among the nation’s leaders in communications technology, chipset development and Internet advertising, content and distribution. It is expected that the new Clearwire will have a time-to-market advantage over competitors in fourth-generation services, supported by strong spectrum holdings and a national footprint. Further, it will build on the strong foundation of Clearwire’s rapidly growing subscriber base of nearly 400,000 wireless broadband customers as of year-end 2007, as well as Sprint’s continued XOHM WiMAX network build-out in certain markets throughout this year.
“This agreement is a historic step forward for WiMAX as it represents the first nationwide deployment of a next-generation mobile broadband Internet in the U.S.,” said Paul Otellini, Intel president and CEO. “The agreement also signifies growing industry support for WiMAX. Given its flexibility, coverage and speed, WiMAX will enable the mobile Internet and is already opening doors to a host of new and exciting applications, devices and business models around the world.”
“Google is a firm believer in supporting new ways for people to access the Internet," said Eric Schmidt, chief executive officer and chairman of Google. "We are proud to invest in the new Clearwire alongside several leading technology and communications companies, and we believe that its planned WiMAX network will increase the ability for users to get high-speed broadband anytime, anywhere.” “This is a great coalition of innovative companies that have joined together to create the next generation of mobile wireless products. It is exciting to be on the ground floor of this new venture that we believe will create unprecedented high-speed wireless products and make them available across the nation,” said Brian L. Roberts, chairman and chief executive officer of Comcast Corporation. “This transaction is attractive to us strategically and financially and puts in place very attractive wholesale relationships for access to Sprint’s existing 3G and Clearwire’s
4G networks, giving us complete flexibility to introduce wireless mobility in terms of product innovation and deployment.”
“This exciting new venture enables Time Warner Cable to help shape the next generation of wireless services in ways that will complement and enhance our products and services," said Glenn Britt, Time Warner Cable’s president and chief executive officer. “We're committed to giving our customers more control over how and where they can easily connect to what's important to them - entertainment, information, and each other. The agreements we're announcing today are a financially prudent way for us to add mobility to our offerings when our customers demand it."
“We are pleased to join our fellow cable operators as well as the new technology and wireless
investors in this strategic venture. This broadband wireless relationship will help us to continue
to provide the best possible competitive services for our customers, today and in the future. It is
consistent with our commitment to delivering customers the products and services that they
desire, whenever and wherever they want,” said Robert J. Miron, chairman and chief executive
officer of Bright House Networks.
The new Clearwire expects to offer mobile wireless Internet services on a broad array of new devices that will be made possible by integrated WiMAX chipsets, scalable operating expenses and a commitment to an open architecture.
Mobile WiMAX is a standards-based wireless broadband technology designed to operate multiple times faster than today’s 3G wireless networks. With embedded WiMAX chipsets in laptops, phones, PDAs, mobile Internet devices and consumer electronic equipment, mobile WiMAX technology is expected to allow users to wirelessly access a range of multimedia applications, such as live videoconferencing, recorded video, games, large data files and more – anywhere in the network coverage area.
The transaction has been approved by all of the parties’ boards of directors, and is expected to be completed during the fourth quarter of 2008. The transaction is subject to various closing conditions including, but not limited to, the approval of Clearwire’s stockholders, and receipt of regulatory approvals, including the approval of the Federal Communications Commission and clearance under the Hart-Scott-Rodino Act.
Governance
The new Clearwire’s board of directors will be comprised initially of 13 members, including
seven directors to be named by Sprint of whom at least one will be independent; four named by
the strategic investors of whom at least one will be independent; one named by Eagle River, the
private investment company controlled by wireless pioneer Craig O. McCaw; and one
independent member to be nominated by the new company’s Nominating Committee.
The parties currently expect Craig McCaw to serve as non-executive chairman of the board.
Along with McCaw, other directors expected to serve for an initial one-year term as new
Clearwire board members are Dan Hesse, Sprint’s president and CEO, Brian Roberts,
Comcast’s chairman and CEO, and Glenn Britt, Time Warner Cable’s president and CEO. In
addition, John Stanton, chairman and CEO of Trilogy Equity Partners and former chairman and
CEO of VoiceStream and Western Wireless, is expected to serve on the board.
Overview of the New Clearwire
The new Clearwire will apply for listing of its common stock on the NASDAQ under the ticker
“CLWR.” The management team will be led by Benjamin G. Wolff, currently CEO of Clearwire,
as the new company’s CEO and Barry West, currently Sprint’s Chief Technology Officer and
XOHM business unit leader, as president of the new Clearwire. Staffing for the new Clearwire
will include the talent from both Clearwire and Sprint’s XOHM business unit. The headquarters
of the new Clearwire will be located in Kirkland, Wash. The new company will continue to have
a significant employee presence, including research and development, in Herndon, Va.
The investment by Intel Capital, Google, Comcast, Time Warner Cable and Bright House
Networks will be used to advance the development of the new Clearwire’s mobile WiMAX
network. This nationwide footprint is underpinned by the substantial next-generation wireless
broadband spectrum portfolio that Sprint and Clearwire collectively hold in the United States.
The combined wireless spectrum should allow the new Clearwire to achieve greater coverage,
cost and operational efficiencies, and bandwidth-utilization than either company could by
operating alone. The new Clearwire is targeting a network deployment that will cover between
120 million and 140 million people in the U.S. by the end of 2010.
In addition to spectrum, Sprint will contribute to the new Clearwire certain hardware, software
and all of its WiMAX-based trademarks and other WiMAX-related intellectual property. The new
Clearwire expects to materially reduce capital and operating expenditures by leveraging Sprint’s
existing infrastructure, reducing the cost of building out the mobile WiMAX network nationwide.
The new Clearwire expects to utilize Sprint’s towers, fiber network and IT support at favorable
bulk rates. Sprint also will realize cost savings for its core business by sharing certain costs of
towers and other infrastructure.
The agreements with the strategic investor group define significant new commercial
relationships, including:
- Intel will work with manufacturers to embed WiMAX chips into Intel® Centrino® 2
processor technology-based laptops and other Intel-based mobile Internet devices, and
will market the new company’s service in association with Intel’s performance notebook
PC brand. - Google will partner with the new Clearwire in the development of Internet services,
advertising services and applications for mobile WiMAX devices. In addition, Google will
be the search provider and a preferred provider of other applications for the new
Clearwire’s retail product. -
Google will partner with the new Clearwire on an open Internet business protocol for
mobile broadband devices. The new Clearwire will support Google’s Android operating
system software in its future voice and data devices that it provides to its retail
customers. -
Sprint, Comcast, Time Warner Cable, and Bright House Networks will enter into
wholesale agreements with the new Clearwire, becoming 4G providers of new
Clearwire’s mobile WiMAX service. -
Comcast, Time Warner Cable, and Bright House Networks and, after completion of the
transactions, the new Clearwire, will enter into 3G wholesale agreements with Sprint,
becoming bundled providers of Sprint’s wireless voice and data services, expanding the
reach of Sprint’s network to more customers, while providing the cable companies a
simpler, more effective vehicle to bundle wireless services. -
Sprint and Google have also entered into an agreement related to Sprint's mobile
services, whereby Google will become the default provider of web and local search
services, both of which will be enabled with location information, for Sprint. Sprint will
also preload several Google services - including Google Maps for mobile, Gmail and
YouTube - on select mobile phones and provide easier access to other Google services. -
Google and Intel have options to enter into 3G and 4G wholesale agreements with
Clearwire and Sprint respectively and have no current plans to do so.
Terms of the Transaction
Under the terms of the agreement, Clearwire will merge into a newly created indirect subsidiary.
In the merger, shares of Clearwire’s Class A Common Stock, together with all outstanding
options and warrants to purchase shares of Clearwire stock, will be converted into an equivalent
number of new shares, options or warrants, respectively, in the new Clearwire. Additionally, all
of Clearwire’s outstanding shares of Class B common stock, which are held by Eagle River and
Intel, will convert into shares of Clearwire’s Class A Common Stock prior to the merger. Going
forward, the shares of the new Clearwire will each have one vote per share. The target price of
$20.00 per share implies a total equity value of approximately $3.9 billion for the existing
Clearwire business.
Sprint will contribute all of its 2.5 GHz spectrum and its WiMAX-related assets into a subsidiary
of the new company. The implied equity valuation of Sprint’s contribution is approximately $7.4
billion which will result in approximately 51 percent ownership, based on the target price of
$20.00 per share.
Comcast will invest $1.05 billion, Intel Capital will invest $1.0 billion in addition to its previous
investments made in Clearwire, Time Warner Cable will invest $550 million, Google will invest
$500 million, and Bright House Networks will invest $100 million, for an aggregate total of $3.2
billion. The investments by Intel Capital, Comcast, Time Warner Cable and Bright House
Networks and the contributions from Sprint will be made into a limited liability company
subsidiary of the new company. Google will invest directly in the new Clearwire’s Class A
common stock. In a separate transaction to occur 90 days after closing, Trilogy Equity Partners
will invest $10 million in the purchase of shares of Class A common stock on the same pricing
terms as the other investors.
The total transaction value will be approximately $14.5 billion, assuming an investment price of
$20.00 per share.
Financial and Legal Advisors
Clearwire was advised by financial advisors Morgan Stanley and JPMorgan, and by legal
counsel Davis Wright Tremaine LLP and Kirkland & Ellis LLP. Sprint was advised by financial
advisors Citigroup and Lehman Brothers, and by legal counsel King & Spalding LLP, as well as
by Jones Day on certain matters.
Conference Call Information
Executives of Clearwire and Sprint will discuss this announcement during a conference call at
8:30 a.m. EDT. The call in numbers are: U.S./Canada: 866-297-0891 or International/Local:
706-679-8981. The conference call passcode is 46844209. The call will be available for replay
shortly after it concludes. The replay call number is 800-642-1687 or 706-645-9291 and the
replay ID number is 46844209. Slides for the call will be simultaneously webcasted and can be
accessed via the Internet at http://investors.clearwire.com or http://www.sprint.com/investors.
The conference call will be archived and available for two weeks after the call.
About Clearwire
Clearwire, founded in October 2003 by wireless pioneer Craig O. McCaw, is a provider of
simple, fast, portable and reliable wireless high-speed Internet service. Clearwire customers
connect to the Internet using licensed spectrum, thus eliminating the confines of traditional cable
or phone lines. Headquartered in Kirkland, Wash., the company launched its first market in
August 2004 and now offers service in 50 markets across the U.S. as well as in Europe. For
more information, visit www.clearwire.com.
About Sprint
Sprint offers a comprehensive range of wireless and wireline communications services bringing
the freedom of mobility to consumers, businesses and government users. Sprint is widely
recognized for developing, engineering and deploying innovative technologies, including two
wireless networks serving approximately 54 million customers at the end of 2007; industryleading
mobile data services; instant national and international push-to-talk capabilities; and a
global Tier 1 Internet backbone. For more information, visit www.sprint.com.
About Intel Capital and Intel
Intel Capital, Intel's global investment organization, makes equity investments in innovative
technology start-ups and companies worldwide. Intel Capital invests in a broad range of
companies offering hardware, software, and services targeting enterprise, home, mobility,
health, consumer Internet, semiconductor manufacturing and cleantech. Since 1991, Intel
Capital has invested more than US$7.5 billion in approximately 1,000 companies in 45
countries. In that timeframe, 168 portfolio companies have gone public on various exchanges
around the world and 212 were acquired or participated in a merger. In 2007, Intel Capital
invested about US$639 million in 166 deals with approximately 37 percent of funds invested
outside the United States. For more information on Intel Capital and its differentiated
advantages, visit www.intelcapital.com.
Intel, the world leader in silicon innovation, develops technologies, products and initiatives to
continually advance how people work and live. Additional information about Intel is available at
www.intel.com/pressroom.
About Google Inc.
Google's innovative search technologies connect millions of people around the world with
information every day. Founded in 1998 by Stanford Ph.D. students Larry Page and Sergey
Brin, Google today is a top web property in all major global markets. Google's targeted
advertising program provides businesses of all sizes with measurable results, while enhancing
the overall web experience for users. Google is headquartered in Silicon Valley with offices
throughout the Americas, Europe and Asia. For more information, visit www.google.com.
About Comcast Corporation
Comcast Corporation (NASDAQ: CMCSA, CMCSK) (http://www.comcast.com) is the nation's
leading provider of entertainment, information and communications products and services. With
24.7 million cable customers, 14.1 million high-speed Internet customers, and 5.2 million voice
customers, Comcast is principally involved in the development, management and operation of
broadband cable systems and in the delivery of programming content.
Comcast's content networks and investments include E! Entertainment Television, Style
Network, The Golf Channel, VERSUS, G4, PBS KIDS Sprout, TV One, ten Comcast SportsNet
networks and Comcast Interactive Media, which develops and operates Comcast's Internet
business. Comcast also has a majority ownership in Comcast-Spectacor, whose major holdings
include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA basketball team
and two large multipurpose arenas in Philadelphia.
About Time Warner Cable
Time Warner Cable is the second-largest cable operator in the U.S., with technologically
advanced, well-clustered systems located mainly in five geographic areas — New York state
(including New York City), the Carolinas, Ohio, southern California (including Los Angeles) and
Texas. As of March 31, 2008, Time Warner Cable served approximately 14.7 million customers
who subscribed to one or more of its video, high-speed data and voice services, representing
approximately 33 million revenue generating units.
About Bright House Networks (BHN)
Bright House Networks is the nation’s 6th largest MSO with 2.4 million customers in several
large markets including Bakersfield, California; Birmingham, Alabama; Detroit, Michigan;
Indianapolis, Indiana; Orlando, Florida (Central Florida Division) and Tampa Bay, Florida along
with several other smaller systems in Alabama and the Florida Panhandle. The high-growth
Tampa/Central Florida markets are contiguous and form one of the country’s largest cable
clusters. BHN’s corporate locations are in Syracuse, New York and Orlando, Florida.
SAFE HARBOR
This news release includes “forward-looking statements” within the meaning of the securities
laws. The statements in this news release regarding agreements between Sprint and Clearwire
and the investors and the benefits to Sprint and Clearwire of the arrangements contemplated by
the agreements; plans for the development and deployment of a broadband network based on
WiMAX technology; the timing, availability, capabilities, coverage, and costs of the WiMAX
network; products and services to be offered on the WiMAX network; the expected closing date
of the transaction; and other statements that are not historical facts are forward-looking
statements. The words “will,” “would,” “may,” “should,” "estimate," "project," ”forecast,” "intend,"
"expect," "believe," "target," “designed” and similar expressions are intended to identify forwardlooking
statements. Forward-looking statements are projections reflecting management's
judgment and assumptions based on currently available information and involve a number of
risks and uncertainties that could cause actual results to differ materially from those suggested
by the forward-looking statements.
Future performance cannot be assured. Actual results may differ materially from those in the
forward-looking statements due to a variety of factors, including, but not limited to:
• the ability of Sprint and Clearwire to complete the merger and other transactions
contemplated by the definitive agreements and satisfy the conditions thereunder,
including obtaining Clearwire stockholder, FCC and Department of Justice approvals;
• the uncertainties related to the implementation of each company’s respective WiMAX
business strategies;
• the costs and business risks associated with deploying a WiMAX network and offering
products and services utilizing WiMAX technology;
• the inability of third-party suppliers, software developers and other vendors to perform
requirements and satisfy obligations necessary to create products and software
designed to support WiMAX features and functionality, under agreements with one or
both of Sprint and Clearwire;
• the impact of adverse network performance;
• other risks referenced from time to time in each company’s respective filings with the
Securities and Exchange Commission, including in the Forms 10-K for the year ended
December 31, 2007, in Part I, Item 1A, “Risk Factors.”
Sprint and Clearwire believe the forward-looking statements in this press release are
reasonable; however, you should not place undue reliance on forward-looking statements,
which are based on current expectations and speak only as of the date of this release. Sprint
and Clearwire are not obligated to publicly release any revisions to forward-looking statements
to reflect events after the date of this release.
Important Additional Information will be Filed with the SEC
In connection with the proposed transaction, a registration statement on Form S-4 will be filed
with the Securities and Exchange Commission. CLEARWIRE SHAREHOLDERS ARE
ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, INCLUDING THE
PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION
STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
MERGER AND RELATED TRANSACTIONS. The final proxy statement/prospectus will be
mailed to shareholders of Clearwire. Investors and security holders will be able to obtain the
documents free of charge at the SEC’s web site, www.sec.gov, or by directing a request to
Clearwire Investor Relations at investorrelations@clearwire.com or (425) 216-4735. In addition,
investors and security holders may access copies of the documents filed with the SEC by
Clearwire on Clearwire’s website at www.clearwire.com, when they become available.
Participants in Solicitation
Sprint, Clearwire and their respective directors and executive officers and other members of
management and employees may be deemed to be participants in the solicitation of proxies in
respect of the proposed transactions. Information concerning Sprint’s participants is set forth in
the proxy statement dated March 27, 2008 for Sprint’s 2008 annual meeting of shareholders as
filed with the SEC on Schedule 14A. Information concerning Clearwire’s participants is set forth
in the proxy statement dated April 29, 2008 for Clearwire’s annual meeting of stockholders as
filed with the SEC on Schedule 14A. Additional information regarding the interests of
participants of Sprint and Clearwire in the solicitation of proxies in respect of the proposed
transactions will be included in the registration statement and proxy statement/prospectus
contained therein, to be filed with the SEC. Once filed, those documents will be available free of
charge at the websites of the SEC and Clearwire.