Clearwire May Not Make Debt Payment due on Dec 1, 2011

Clearwire is weighing whether to make a big debt payment that comes due in two weeks, a decision that could prove a turning point for a company that had hoped to cover the country with wireless broadband service. Failure to make the payment could raise concerns about whether the company can stay out of bankruptcy court.

The $237 million payment is due Dec. 1. And Clearwire, with $698 million in cash and short-term investments on Sept. 30, can afford to make it. But the company needs to raise lots of money if it is to stay in business after the next 12 months, so it's debating the unusual step of failing to make a payment.

"It's a very expensive payment that we have," Chief Executive Erik Prusch said in an interview. "It would be a significant drain of our cash, so we have to evaluate everything in terms of our decision of where we're going."


Caught up in the debate over Clearwire's future are 9.5 million subscribers. Most come to the company through Sprint, but the total also includes 1.3 million retail customers.

"I hope that they can survive," said Michael Artsis, a New York-area video journalist who uses Clearwire products to stream live video from events he's covering. "I think about it all the time now – what would I do if they weren't around."

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Comment & Analysis:  While Clearwire had great goals and objectives, they didn't have sufficient funds to complete their mobile WiMAX buildout.  Majority owner Sprint, didn't do them any favors by constantly wrangling and arguing with the firm.  The LTE TDD buildout is now also in jeopardy, as are all the exising Sprint "4G" subscribers!  What will happen to them if CLEAR 4G is turned off on Jan 1, 2012?

Why haven't Comcast and TW Cable been more aggressive in reselling "Clear 4G?"  Is it lack of WiMAX devices, support issues or the MSOs giving up on mobile broadband and focusing instead on Business Class services?

And where is former #1 WiMAX Cheerleader Intel (a major Clearwire and UQ Communications investor) in all of this?

We hope that Clearwire makes the debt payment and can get funding from its current investors.  If not, all of Sprint's WiMAX initiatives, including the brilliantly done M2M communications, will be for naught!


Views: 81

Comment by Alan J Weissberger on November 18, 2011 at 10:15pm

Challenge to all WiMAX champions:  Please comment on this blog post!

Comment by Alan J Weissberger on November 18, 2011 at 11:44pm

I certainly hope so, Mike.  No other comment?  Perhaps, you can persuade Carl to comment.  He worked a lot with Clearwire and was once a CLEAR 4G reseller.  Thx,  alan

Comment by Kobe Wadsworth on November 19, 2011 at 6:05am

Clearwire, or Clear.? has always shown in the red, why is that. Even after they started to really add subscribers from their wholesale deal with Sprint, went from 200k to Millions of clients. The more they add the deeper in debt they become. Perhaps with their price hike, they can find the black.

Comment by Alan J Weissberger on November 19, 2011 at 12:31pm

Kobe,  Can't answer your ? about Clearwire being in the red other than broadband wireless network build out is very capital intensive and expensive.  Carl Townsend, the co-owner of this web site, is a financial analyst and he would be able to provide a more comprehensive answer to your ?.  It is very doubtful that their price hike will put them in the black.  Did you ever hear of elasticiy of demand?   :-)  or :-(  ???


Note: CLEAR 4G is the brand name for Clearwire's IEEE 802.16e-2005 complaint mobile WiMAX service which is mostly sold on a wholesale basis to other carriers (e.g. Sprint) but also sold directly by Clearwire.

Comment by Alan J Weissberger on December 1, 2011 at 8:06pm

Update to this Clearwire story is at wimax360:


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