Clearwire and Sprint announce agreement worth potentially $1.6 billion

Clearwire made good on its debt commitments today, making a $237 million interest payment, after considering delaying the payment to pursue new funding during a reported 30-day grace period (Unfiltered: Clearwire, with payment due, may hit up reluctant buddy Sprint). The delay was ultimately unnecessary, as in partner Sprint it found a good deal of the funding it was hoping for.

Sprint's 4G network is partly dependent on Clearwire's WiMax infrastructure, making the nation's number-three carrier a likely funding source, despite its own financial unease (CP: Sprint defends iPhone decision, will need up to $7 billion in financing help). Were the struggling WiMax provider to declare bankruptcy, creditors may have sold Clearwire's spectrum to the highest bidder, the thinking goes, leaving Sprint in a lurch.

The deal they announced Dec. 1 could give Clearwire up to $1.6 billion over the next four years and secured Sprint's access to Clearwire's WiMax network for just as long.

Among the details of the agreement are that:

-- Sprint will pay Clearwire $926 million — two-thirds of it in 2012 — for unlimited 4G WiMax retail services during 2012 and 2013 that are subject to conditions.

-- The deal sets long-term usage-based pricing for WiMax services in 2014 and beyond. Through at least 2012, Sprint will continue to sell WiMax-capable devices with two-year contracts and to support them through the life of the contracts.

-- Separate pricing was determined to allow Sprint to "re-wholesale" 4G WiMax service.

-- A foundation was created for the deployment of Clearwire's LTE Advanced-ready overlay network (TDD-LTE) and terms were outlined by which Sprint may gain access to the additional LTE capacity. If Clearwire achieves certain build-out targets and network specifications by June 2013, Sprint will pay Clearwire up to $350 million in a series of prepayments over a period of up to two years.

-- Before beginning the LTE Advanced build out, Clearwire will look for additional funding.

-- In 2013, Sprint expects to launch devices including phones and laptop cards that will use Clearwire's TDD-LTE network.

-- In the event of an equity offering, if Clearwire can raise between $400 million and $700 million, Sprint will participate in the offering "on a pro rata basis up to $347 million," which would be consistent with its current 49.6% voting interest in Clearwire.

"Today's announcement further cements the mutually beneficial relationship between our two companies," Erik Prusch, president and CEO of Clearwire, said in a statement. "It is an important step toward meeting Clearwire's key goals of extending our current 4G network arrangement, securing a commitment to our future LTE Advanced-ready network and funding the business."

Sprint CEO Dan Hesse added, "It provides Sprint improved pricing, allows us to continue to provide WiMax 4G services to our customers today and to new customers in the future, and provides additional LTE capacity to help complement our Network Vision strategy and meet our customers' growing data demands."