Clearwire (CLWR) and Sprint (S) Will Likely Combine WiMax Assets and Receive Capital Investment from Intel -Pali Research

March 4, 2008 11:29 AM EST

Pali Research issued a research report this morning addressing a potential WiMax deal between Clearwire Corp. (Nasdaq: CLWR) and Sprint Nextel (NYSE: S).

The firm believes the most likely outcome will have Sprint and Clearwire combining their WiMax assets into a new company, which will be funded through Intel (Nasdaq: INTC) making "an incremental investment." Pali believes that Sprint would not want to maintain control of the new company, and therefore would attempt to maintain a stake greater than 50%.

Pali said, "With 300 million people in the United States, we believe a WiMax buildout of 125 million to 200 million POPs would be necessary for WiMax to be taken seriously. We estimate this would cost $3 billion to $5 billion excluding operating losses..." Keeping this in mind, the firm believes that if Intel were to invest $2 billion in Sprint and Clearwire's new company, the company would still need to raise additional capital. If this were the case, another equity investor would be needed, but Pali believes that Sprint would not be very excited about losing its greater than 50% equity position.

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