Clearwire approves WiMAX deal, shares plummet

As expected, Clearwire shareholders on Thursday approved the ‘new’ Clearwire joint venture. Comprising Sprint Nextel (51 per cent) and Clearwire (27 per cent) – with the remaining equity held by Intel, Google, TimeWarner Cable, Comcast and Bright House Networks – the new company has ambitious plans to roll out mobile WIMAX across the US.

What was surely less expected was the extent of negative reaction to the deal by the financial markets. Clearwire’s share price fell by a massive 33 per cent to $1.91 during yesterday’s trading, while Sprint Nextel’s share price slumped by 27 per cent to $1.37.

The share price declines of both Clearwire and Sprint Nextel far exceeded the average share price falls during yesterday’s trading. The New York Stock Exchange, where Sprint Nextel is listed, fell ‘only’ by 10.5 percent, while Nasdaq, Clearwire’s stock exchange, dropped by 7.5 per cent.

Yet those involved in the new JV, as you would expect, are upbeat. “Today, our shareholders have taken a transformative step toward enabling an entirely new mobile internet experience for consumers and businesses across the country,” Clearwire CEO Benjamin Wolff, said in a statement. “With an unmatched spectrum portfolio, a next generation all IP network, an ever-expanding ecosystem of mobile 4G devices, and the backing of some of the most innovative communications, entertainment and technology companies in the world, Clearwire is ready to redefine mobile internet services in the US.”

Clearwire’s approval of the new JV, although it says there are still some administrative details to clear up before the transaction can go ahead – expected to be completed by the year end – appears to be the last step on a long road for WiMAX supporters looking for nationwide US rollout.

Back in May 2008, Google, Intel and three US cable companies, pledged a total of  $3.2bn into new Clearwire, which appeared to put it the JV on a much more solid financial footing. And on 4 November, FCC approved the new company, despite protests by AT&T.

Nevertheless, IPCS, a Sprint Nextel affiliate, still looks determined to block the new Clearwire from operating in the regions where it has services up and running.