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Clearwire facing continued financial woes

Clearwire facing continued financial woes


Clearwire is considering skipping a large payment it owes, putting both its future and Sprint's in question.

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Clearwire, the wireless company that provides Sprint with WiMAX 4G services, is reportedly considering skipping a large debt payment it owes on December 1st. The move wouldn't necessarily be a full default for the company, as it would have thirty days grace period to make the payment. Clearwire's CEO is apparently mulling whether spending up to one third of the company's cash reserves right now is a good idea, according to the Wall Street Journal: "we have to evaluate everything in terms of our decision of where we're going."

Exactly where Clearwire is going is exactly the question. Although Sprint, the majority owner of Clearwire, recently made a move that may suggests it intends on providing further funding, the carrier has also hedged its bets on its 4G LTE future by partnering with LightSquared. Should Clearwire decide to skip this payment and Sprint decide to hold back further investment, the possibility of bankruptcy could likely be on the table.

Whether that would have immediate implications for customers is unclear, but at the very least Sprint has committed to providing WiMAX 4G services at least through 2013 and can't do that without Clearwire's help. There's more than enough spectrum — not to mention paying customers — at stake to make us believe that whatever boardroom gamesmanship that's happening here will be resolved soon, but until then Sprint's LTE transition won't look as smooth as Dan Hesse would like.