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November 9, 2007

Could Clearwire be partnering with Google?

Posted by Tricia Duryee at 9:17 AM

Is there something else in the works now that Sprint Nextel and Clearwire have officially said they are not going through with their partnership announced in July?

Despite the break-up, Clearwire's CEO Ben Wolff hinted in the third-quarter conference call this morning that something else may still be in the works.

He said that because of the spectrum auction coming up in January, there has been immense interest in the wireless broadband business, and a Sprint partnership would have precluded working with anyone else.

And who that might be?

Google?

It's no secret that Google has been really interested in the business, pledging billions to participate in the auction and lobbying the FCC hard to tailor the spectrum to its desires.

Wolff said that he can't talk about any transactions publicly until they are complete, but that in general "I would say that there are a number of factors that caused an increased focus on the space that we are in," he said. "We are looking and exploring all of our strategic options and there's a quite a bit of focus on this space right now."

Wolff said it was only in the past 48 hours that the partnership with Sprint had fallen apart, and that he and Gary Forsee, who was Sprint's CEO at the time of the letter of intent, thought it would have closed within 60 days of the partnership's announcement in July. But since then, Forsee resigned and Sprint Nextel has come under increasing fire for its poor performance on its cellular networks, and investors are saying its upcoming WiMax business is a distraction to that core business.

As I wrote in the blog item before, Sprint said in its quarterly filing with the SEC this morning:

"We recently agreed with Clearwire Corporation to terminate the non-binding letter of intent signed by us and Clearwire in July 2007 that provided, among other things, for the joint construction of a nationwide broadband network based on WiMAX technology."

In Clearwire's third-quarter press release, the company offered slightly more details, and sounded even optimistic, saying discussions with Sprint continue, but no partnership is guaranteed:

"Clearwire and Sprint Nextel continue their discussions regarding how best to collaborate for the deployment of a nationwide mobile WiMAX network. Over the course of the parties' discussions, Clearwire and Sprint concluded that the joint build transaction originally contemplated by the previously announced letter of intent 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. Consequently, the parties have agreed to terminate their obligations under the letter of intent, although discussions continue regarding the best means to accomplish the benefits that were expected under the letter of intent. Notwithstanding the ongoing discussions, there can be no assurance that a transaction or agreement between Clearwire and Sprint Nextel will be concluded."

Wolff said: "We are continuing to discuss with Sprint on how to collaborate, but I can't tell you if we will ultimately have a partnership with Sprint or not, but I can tell you that all of our reasons to support the original reason to sign the letter of intent are still there. These opportunities may include other strategic transactions or partnerships, which may or may not include Sprint. There's more demand for the type of networks that Clearwire is building today."

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Tricia Duryee
Tricia Duryee
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Angel Gonzalez
Angel Gonzalez
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Kristi Heim
Kristi Heim
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Benjamin J. Romano
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Mark Watanabe
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