Clearwire's WiMax Rollout Faces Steep Hurdles

Though Clearwire Corp.'s recent merger with Sprint Nextel Corp.'s wireless broadband unit put it on more solid financial and strategic footing, the company still faces a steep climb as it tries to best rivals in the rollout of a new generation of mobile Internet access. Building a nationwide network of WiMax towers quickly will be expensive. The deal with Sprint, which was completed late last month, brought an infusion of $3.2 billion from equity investors including Intel Corp., Google Inc. and several cable providers. That money will go toward initial build-outs in 2009, beginning with the 46 markets where Clearwire already offers a wireless service similar to WiMax through modems or cards that can be inserted in PCs. But analysts say Clearwire may need $3 billion to $5 billion more to complete the mobile WiMax network. Chris King, a telecom analyst at Stifel Nicolaus, said if the credit markets don't improve, Clearwire would likely have to turn to its strategic equity investors for more capital. A strategy of slowing down the build-out to save costs also has risks, however, because it might wipe out the effect of Clearwire's head-start in next-generation wireless broadband.