“Leap is another milestone and it’s not going to stop here,” Erik Prusch, Clearwire’s CEO, said in a telephone interview today.
The deal will see Bellevue, Washington-based Clearwire supplement Leap’s own network using so-called fourth-generation long-term evolution technology over five years, according to a statement. Financial terms weren’t disclosed.
Clearwire is seeking new partners as it transfers to LTE from older WiMAX technology. Regulators have grounded Philip Falcone’s LightSquared mobile-broadband venture and temporarily denied Dish’s request to convert satellite spectrum for use in ground-based high-speed wireless networks, which benefits Clearwire, Kevin Smithen an analyst with Macquarie Capital USA Inc., said.
“Clearwire has the most readily available spectrum on the market,” said Smithen, who has a neutral rating on the stock.
The U.S. Federal Communications Commission last month blocked LightSquared Inc.’s mobile-broadband venture over potential signal-interference issues with global-navigation systems. Leap entered a long-term agreement with LightSquared a year ago.
On March 2, the FCC let Dish buy airwaves while denying waivers it needs to quickly offer the service request to convert satellite spectrum, so new permanent rules for such requests could be written.
There’s “a spectrum crunch” in the industry, Prusch said. “Everyone needs it and we are in a unique position to provide it.”
There isn’t a “direct association” with LightSquared’s troubles, Prusch said of the Leap deal. “We have a network that’s in operation,” he said. Mike DiGioia, a Clearwire spokesman, declined to comment on benefits the company may be seeing from Dish’s stalled broadband plan in an e-mailed statement.
MetroPCS Communications Inc. (PCS), the Richardson, Texas-based pay-as-you-go operator, “may also be considering a more formal relationship with Clearwire,” Jennifer Fritzsche, a Wells Fargo Securities analyst, wrote in a note.
MetroPCS has told investors that it would look to Clearwire for spectrum.
Leap, which sells its service under the Cricket name, has always said it would explore additional 4G partners, Amy Wakeham, a company spokeswoman, said in an e-mailed statement.
Fourth-generation technology provides faster network speed for wireless operators.
“The Clearwire agreement provides us with another option for supplementing our own 4G LTE roll-out and for roaming in non-Cricket markets,” she said.
In December, Clearwire’s majority owner Sprint Nextel Corp. (S) signed a four-year wholesale-network sharing agreement with Clearwire worth about $1.6 billion.
Prusch declined to share any financial terms or impact from the Leap deal. Generally “when we add revenue on top of a fixed cost base it is very accretive,” he said.
Clearwire, said last month that it may need new capital to fund operations beyond next year as losses widened in the fourth quarter.
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