Talks on National Network Include Intel, Google, Clearwire
By Zachary A. Goldfarb
Washington Post Staff Writer
Wednesday, January 30, 2008; D01
Sprint Nextel is holding new discussions to team up with other firms to deploy a nationwide high-speed wireless network, according to company and industry sources.
The venture may include a former partner, the telecom start-up Clearwire, as well as Intel, Google and SK Telecom, part of a South Korean media and technology conglomerate.
Sprint, of Reston, has promoted WiMax as a central part of its wireless strategy, pitching it as a technology that will let consumers surf the Web on laptops and other mobile devices at much faster speeds than are currently available. Sprint has said it would spend up to $5 billion on building the network.
Last fall, Sprint abandoned a partnership with Clearwire to jointly develop a WiMax network. The termination of that partnership came shortly after chief executive Gary Forsee, the architect of Sprint's WiMax plan, was forced out.
The potential joint venture marks another step by new Sprint chief executive Daniel R. Hesse to shape the firm's future. Since taking over in December, he has authorized the dismissal of about 4,000 employees and the shuttering of 125 Sprint-branded retail shops. He has also let go three members of senior management, including Chief Financial Officer Paul Saleh, who served as interim chief executive before Hesse took over.
Sprint insiders said yesterday that nothing has been finalized about the plans to form a new venture, though one official said a decision could come within a few weeks. The new venture may involve Sprint spinning off its WiMax division and merging it with Clearwire, or spinning off its WiMax division into a new venture in which Clearwire, Intel and others invest. The officials spoke on the condition of anonymity because they had not been authorized to speak about the private talks.
"We don't comment on rumors and speculation," said Leigh Horner, a Sprint spokeswoman. Officials at Intel, Google and Clearwire declined to comment; e-mails to SK Telecom were not returned.
Analysts said the decision to seek partners may reflect Sprint's financial troubles. It has seen its stock price slide and its revenue and profit decline as subscribers to its core wireless service abandon it for competitors like AT&T and Verizon Wireless.
"Sprint is trying to find a right balance they can justify from a financial standpoint at a time when they have other demands and their core business is suffering," said Richard Klugman, a telecom analyst. Klugman added that partnerships with brand-name firms like Google and Intel would be important for the marketing of the service.
But analysts warned of risks.
"They're going to be giving up some of the opportunity on the revenue and profitability side," said Christopher King, an analyst at Stifel Nicolaus. "To the extent they could lose out on a revenue opportunity with WiMax, that's unfortunate, but given their current state of operations, they have more important things to focus on."
Sprint is on its way to deploying by the end of April its WiMax service, which it now calls Xohm, in three cities -- the District, Baltimore and Chicago. It hasn't specified a schedule for further deployment, but the company has always planned to partner with third-party WiMax distributors to provide coverage in locations where Sprint doesn't have a presence.
Sprint once said it hoped the service would be accessible to 100 million people by year-end.
Sprint's stock was up 8.3 percent yesterday, closing at $10.80, though it is down about 40 percent in the past year. Clearwire's stock jumped 23.2 percent, closing $15.34 and recovering some of the ground it lost after the dissolution of the original Sprint partnership.
A partnership could also be significant for Intel and Google. Intel has invested heavily in developing WiMax products.
And Google, which is making its own forays into the mobile market with a cellphone operating system called Android, has said it plans to participate in a Federal Communications Commission auction to buy wireless spectrum.
If Google is part of a Sprint WiMax venture, it would "have plenty of spectrum," Klugman said. "They certainly wouldn't need any more."
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