With the closing of Clearwire's
But that equity offering may not have occurred if it weren't for an eleventh-hour deal Clearwire coerced out of Sprint Nextel
Clearwire, which has been Sprint's provider of 4G WiMAX wireless services, did not have the wherewithal to pay for the necessary upgrade to the faster LTE technology. But Sprint, Clearwire's majority owner, was hesitant about getting more deeply entangled with Clearwire. So Clearwire CEO Erik Prusch dropped a bombshell. In November, he told The Wall Street Journal that his company might not pay the $237 million interest payment due Dec. 1.
Sprint, which needed to build an LTE network as soon as possible to compete with AT&T's
Clearwire raised $384.1 million from the sale of Class A common stock, and another $331.4 million from the private sale of Class B common stock to Sprint. Sprint's equity funding to Clearwire was included in the Dec. 1 agreement, part of which has now been fulfilled.
Further aspects of the agreement call for Sprint to continue to use the Clearwire WiMAX network until 2015, and Clearwire is to meet certain network build-out requirements by June 2013.
Now that the AT&T/T-Mobile merger proposal is looking less likely, Sprint, with Clearwire's help, may have a little more breathing space in which to become more competitive.
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Fool contributor Dan Radovsky owns shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.