UPDATE 2-Clearwire says funding could last until Q1 2014
NEW YORK, April 25 (Reuters) - Clearwire Corp, a U.S. wireless service provider which is majority owned by Sprint Nextel, said on Thursday it would have enough cash to fund its operations until the first quarter of 2014 if it does not raise any additional financing.
However the company said on its quarterly conference call that it would need to stop high-speed wireless network upgrade and also make other cost cuts in order to stay afloat until the first quarter. Clearwire also announced a narrower operating loss even as its revenue declined.
Clearwire, which agreed in December to be bought out by Sprint for $2.97 per share, told analysts that deal would go ahead even if Sprint reneged on its October agreement to sell 70 percent of its shares to Japan's SoftBank Corp for $20.1 billion.
Since both these agreements were forged, satellite television provider Dish Network announced a $3.30 per share counter bid for Clearwire in January, leading investors hoping that Clearwire would receive a sweeter bid.
Then Dish made a $25.5 billion bid for Sprint on April 16 in a challenge to SoftBank and said it had not formally withdrawn its Clearwire offer but would honor the original Sprint deal with Clearwire if it is successful in buying the company.
Clearwire, which called a special meeting on May 21 for a shareholder vote on the Sprint bid, said is still evaluating a bid from its biggest rival Verizon Wireless for $1 billion to $1.5 billion of its spectrum.
Clearwire can draw on $80 million of financing from Sprint in May but if shareholders vote against the Sprint deal on May 21, it would have to forego another $400 million of funding available from Sprint under their December agreement.
Clearwire declined to comment during the conference call on a recent announcement that it was considering defaulting on a $255 million interest payment due on June 1.
Analysts see this as a negotiating tactic that could lead to a higher offer from Sprint.
"All investors eyes are focused on a potential sweetened offer from Sprint and the next scheduled interest payment date of June 1. That's leverage," said Roe Equity Research analyst Kevin Roe.
Clearwire said its first quarter loss narrowed to $303.69 million from $421.89 million. Revenue fell to $318 million from $322 million.
- British Muslim calls for action on jihadi subculture after beheading video |
- Obama condemns killing of reporter, U.S. hits militants in Iraq |
- Israeli air strike kills three Hamas commanders in Gaza |
- Stocks extend rally, S&P hits new high as data signals growth
- Thai junta leader appointed PM by hand-picked parliament |