WiMAX Has Been Saved!!! Some Next Steps, Concerns, and a Few Suggestions!!!

Implications: Well it is about time.  A joint venture between Sprint, Clearwire, Comcast, Time Warner, Google, and Intel is a blessing in disguise for WiMAX. Sprint still has the Nextel problem to deal with.  Maybe Hesse can spinoff Nextel as separate publicly held entity and have Morgan O'Brien invest in the spinoff. 

Analysis: A joint venture (JV) between Sprint, Clearwire, Comcast, Time Warner Cable, Google, and Intel is a blessing in disguise for WiMAX but also a blessing for Sprint.

First lets tackle the WiMAX issue.  WiMAX has been commercial for about 2.5 years now.  This means it has a major head start when compared to LTE.  LTE (Long Term Evolution) is the 4G wireless technology of choice for Verizon Wireless and AT&T Mobility.  This does mean that WiMAX wins the 4G wars.  What this means is that we will see honest-to-goodness, knocked down, dragged out competitive fighting.  This is an opportunity for the investment community.

This joint venture also means that Sprint will have access to the capital needed to build a nationwide network.  However, this does not mean the wireless carrier’s troubles are over.  Sprint needs to shed itself of Nextel.  As I have said in past analyses, Sprint can either sell the entire company off as a going concern or simply spinoff the company as a separate publicly traded entity.  My suggestion to Dan Hesse is do not sell of Nextel cheap.  Morgan O'Brien is out there and he has cash and he wants spectrum for Cyren Call.  Maybe there is way for him to help out Dan Hesse by investing in a spinoff of Nextel.

As part of the restructuring process, Sprint needed to reorganize the management team.  Hesse has done some of that.  Next, Hesse needed to determine what he wanted Sprint to be when it grew up.  Hesse answered that question by announcing it was staying as a player in wireless with the advent of its flat rate plan.  Next, Hesse had to answer the question of how he was going to stay in the game.  Today, he answered that question by announcing the joint venture.

Things to look for in the next month or so:

    -    Management announcements for the JV
    -    Vendor selection or at least the short list of contenders
    -    More details on the financial structure of the JV

This JV is not going to be easy.  The name of the JV is an indicator of the potential powder keg we are looking at.  The name being used is the name of a startup that has been around for at least 5 years and has almost no visibility to the public.  I can only guess what the meeting between these mega giants was like:  “We are not going to call it Sprint, Comcast, Time Warner, Intel or Google.  We will just call it Clearwire.  Clearwire who?  No one has ever heard of Clearwire”.  Think about it, why would the majority shareholder allow a company to be named after a minority shareholder?  Calling Clearwire solves a lot of problems for everyone.  No egos are bruised and no company gains an advantage.  Given Clearwire’s position, the group obviously felt that giving the JV the name of a minority shareholder would not hurt the bigger members.  This may also a good sign because this hopefully means the group can make decisions.  You always need to be concerned about corporate egos in situations like this.

The big details and questions have been addressed and answered.  However, the JV can die on the vine if the little problems get in the way of “getting the job done”.  That is probably going to be the biggest hurdle for the JV:  making decisions that benefit all of the shareholders.

As for the bigger picture of WiMAX.  This is a good thing.  With the big dogs backing this JV we will see the capital markets opening up.  This JV will not only have access to cash but also have access to technology and distribution.

WiMAX as a whole will benefit greatly from this JV.

The actual deployment of the network will require total cooperation amongst the partners.  Missteps are still a possibility.  What is not clear is how the deployment will take place and how the network will serve the JV partners.

My suggestion on the deployment:  Cherry-pick the markets and deploy where Verizon and AT&T will likely deploy their LTE systems; this will probably mean the Tier 1 markets.