* Spectrum auction loses steam
* Clearwire, T-Mobile USA, Sprint talks remain active
* Clearwire needs more funding for network build
(Adds details on auction)
By Nadia Damouni and Sinead Carew
NEW YORK, Jan 19 Clearwire Corp's CLWR.O
auction to sell wireless airwaves appears to have lost
momentum, with big suitors bowing out except for T-Mobile USA,
sources familiar with the matter said.
"You are down to a point where something is going to
happen or not, with the logical party that is left," said one
of the sources referring to T-Mobile USA.
T-Mobile USA has said previously that it is looking at
multiple options for expanding the amount of wireless airwaves
it can use, including a potential deal with Clearwire. The
company declined further comment on Wednesday.
Clearwire, which is 54 percent owned by Sprint Nextel
(S.N), is looking to raise billions of dollars in new funding
to finish a high-speed wireless network it is building through
either a sale of unneeded spectrum or an equity investment.
The company said in December that it had hoped to snag
another round of funding by year-end or early 2011 with the
potential for a spectrum sale of as much as $2 billion.
Negotiations between T-Mobile USA and Clearwire are ongoing
over the spectrum purchase, among a number of other investment
options, said one of the sources. Other remaining parties are
only considering buying smaller amounts of the spectrum in
regional areas, for a few hundred million dollars, said the
Some analysts had said they hoped T-Mobile USA would be
ready to make an announcement about Clearwire at an analyst
meeting scheduled for Jan 20. But T-Mobile USA's new chief
executive, Philipp Humm, is not expected to provide much detail
about the situation at the meeting, said the sources.
One reason for the hold up is that T-Mobile USA is also
weighing a deal with Harbinger-backed startup LightSquared for
use of its spectrum for fourth generation (4G) high-speed
"(Clearwire) is in active discussions. T-Mobile needs to
get something done more broadly on their 4G strategy, and they
are giving themselves until the end of the first quarter to
have something basically done," said one of the sources. "That
could be Clearwire, or maybe LightSquared. But it looks more
The sources were not authorized to speak to the press.
A representative for T-Mobile USA declined to discuss the
contents of Humm's planned presentation. Clearwire and Sprint
both declined comment for the story.
Clearwire raised about $1.3 billion in debt late last year,
giving it enough money to maintain operations for up to a year,
according to one of the sources. But it needs more money for a
network expansion to keep it competitive with bigger rivals.
Clearwire, whose investors also include cable operators
Comcast Corp (CMCSA.O) and Time Warner Cable TWC.N, was set
up in its current form through a 2008 transaction. Along with
Sprint the cable companies rent space on Clearwire's network to
sell high-speed services. Sprint, the No. 3 U.S. mobile service
depends on Clearwire for its high-speed wireless strategy.
Relations between Clearwire and Sprint Nextel Corp (S.N)
have hit some rocky ground recently over issues such as
Clearwire's pursuit of a direct retail strategy and the amount
it charges Sprint.
But Craig McCaw's departure as Clearwire's chairman at the
end of December and the appointment of former chief executive
officer, Ben Wolff as a director could pave the way for more
constructive talks between the pair, some of the sources said.
"Ben (Wolff) works well with Sprint... there's a decent
chance they can have meaningful discussions," said one of the
sources who noted that Wolff, who is a lawyer by training, was
instrumental in nailing the 2008 transaction.
Sprint has previously said that a merger between Sprint and
Clearwire could be helpful, but that for now such a deal would
cost too much. It would also be complicated by the fact that
Clearwire has several other strategic investors.
But as Sprint gets stronger -- some analysts expect it to
add contract customers for the full year 2011 on a net basis
for the first time since 2006 -- one of the sources said it
could move toward a Clearwire deal as soon as this year.
"Nothing is going to happen for 6 months or so," said one
source referring to Sprint's next move. If Sprint's performance
stabilizes, he said it could potentially enter negotiations for
new terms for its Clearwire relationship.
It is also still debated whether Sprint will decide to
close a deal with Clearwire and then go on to consummate an
agreement of some sort with T-Mobile USA, the sources said.
Combining interests of all three companies would ideally create
a big operator with more clout to fight the U.S. market leaders
Verizon Wireless and AT&T Inc (T.N).
(Reporting by Nadia Damouni and Sinead Carew in New York;
Editing by Bernard Orr)