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Clearwire raises $360 million
Seattle Times technology reporter
Clearwire, wireless entrepreneur Craig McCaw's newest venture, has raised $360.4 million in a debt offering, just the latest staggering figure the 2 ½-year-old company has attracted.
The offering was detailed in documents filed with the Securities and Exchange Commission (SEC) that became available Friday.
The last time the Kirkland company received significant funds was in August, when it raised $260 million in debt. That offering was structured so that it could increase to more than $520 million. Documents in both offerings said investors can buy shares at a later date through warrants.
If the company was able to double its money from the August filing, it probably has raised more than $1.1 billion to date. But the total may be larger because some investments have not been made public.
"Holy mackerel. ... That's not small beans in these jaded times," said Joe Laszlo, senior analyst at Jupiter Research in New York, who tracks the broadband industry.
A Clearwire spokeswoman confirmed the latest offering, but declined to discuss specifics.
Clearwire provides wireless broadband Internet access in areas surrounding 26 U.S. cities and dozens of other cities around the world. The technology is an early version of WiMax, which promises to deliver wireless high-speed Internet access as an alternative to DSL or cable. Subscribers also can use the service wherever they bring the modem, which is about the size of a thin textbook.
TechnologyProvides wireless broadband using an early form of WiMax.
Chief executive Craig McCaw.
Markets Launched its first market in Jacksonville, Fla., on Aug. 26, 2004. Available in 26 U.S. markets, including Bellingham and Tri-Cities in Washington. Also has markets in Europe and Mexico.
Speed 1.5 megabytes per second downstream.
WiMax, in general, can cover great distances and reaches beyond the scope of Wi-Fi to more closely resemble third-generation high-speed networks launched by cellular providers. Clearwire is one of the first to deploy the technology commercially.
"They are way ahead of the WiMax curve," Laszlo said.
In the SEC document, the company did not disclose who the investors were or what the money would be used for. Clearwire has disclosed only two of its investors. Last year, it said it was partnering with Bell Canada to provide voice calls over its network.
As part of the deal, Bell Canada invested $100 million. In a financial filing, Bell Canada disclosed that its investment equaled a 12 percent interest in Clearwire. That would have made Clearwire worth $833 million at the time.
Before that deal, Clearwire said it received an unspecified amount from Intel, which is aiming to be a large player in the WiMax industry by providing chips.
WiMax is a capital-intensive business that requires acquiring spectrum, or airwaves, and building out networks. Clearwire is thought to have the second-largest spectrum holdings in the 2.5 GHz band after Sprint Nextel. The company, which has about 500 employees, must also support NextNet, its equipment subsidiary in Minneapolis.
Although it is considered a market leader, Clearwire is not without its challenges, Laszlo said. The company will have to go up against phone and cable companies.
"A fairly hefty chunk is going to have to go to marketing and building the brand itself," he said. It's not that the company has to teach a consumer what broadband is, but "they have to convince consumers there's a third way that they haven't heard of, that is a viable alternative."
Recently, Clearwire received additional attention after analysts speculated a partnership could be brewing with Rupert Murdoch's DirecTV.
Satellite providers have started to lose share to cable providers, which have lured back subscribers by offering bundled services that include TV, phone service and Internet access. A partnership with Clearwire, which is also expected to provide voice services, could be a remedy for DirecTV.
Murdoch said at a conference he may invest up to $1 billion in a solution and a decision could come as early as this month. Clearwire has not commented on any such deal.
Tricia Duryee: 206-464-3283 or email@example.com
Copyright © 2006 The Seattle Times Company