Clearwire Goes For $400 Million IPO

With all the talk about network neutrality, and the buzz around fixed wireless, WiMAX and wireless broadband, it is no surprise that Clearwire is getting ready to cash in. The company started by wireless zen master Craig McCaw has just filed to go public and is looking to raise as much as $400 million. Merrill Lynch, Morgan Stanley, J.P. Morgan Securities, Bear Sterns, and Wachovia Capital Markets are the underwriters. The company has raised nearly $360 million so far from backers that include McCaw, Intel Corp., and Bell Canada.

Clearwire’s decision to tap the public markets underscores the fact that setting up big nationwide WiMAX network in the US is going to be very very expensive. In-Stat, estimates that it would take a total of $3 billion to set-up a national WiMAX network in the US. Clearwire was started back in 2003, and uses pre-WiMAX gear developed by its NextNet Wireless arm to provide download speeds of 1.5 Mbps.

As of March 31, 2006 the company sold its pre-WiMAX wireless service in 27 markets in the US. Clearwire also offers wireless broadband services in 7 regional international markets in Brussels, Belgium and Dublin, Ireland. Clearwire had about 88,000 subscribers (including 11,500 in Belgium and Ireland) at the end of March 2006. It lost about $140 million in 2005, and $33 million in 2004. Revenues in 2004 and 2005 were $15 million and $33 million respectively. The company had 56,200 subscribers to its service in the US as of December 31, 2005 and another 6,100 subs internationally.

Clearwire owns licensed spectrum in the 2.495 to 2.690 GHz band and has the second largest spectrum position in this band after Sprint Nextel. In its filing the company suggests that it has enough spectrum depth to launch its service to an estimated 90 million people. UBS Research in a note to their clients this morning writes, ” … licensed spectrum position is key to the successful deployment of this service and Sprint and Clearwire have an advantage in this area. Both companies have engaged in 2.5 GHz license swaps in the last two years in order to better align their spectrum position. In October 2005, the two companies submitted an application with the FCC seeking approval on a deal that would send Sprint Nextel nine licenses in large markets in return for 61 licenses in primarily small markets to Clearwire.”

If you are pouring through the documents and have interesting thoughts, drop me a note. Otherwise, I will get to it later this evening.