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Clearwire, Sprint Settle Differences

4/19/2011 11:49:19 AM Eastern
Kirkland, Wash. - Clearwire and Sprint have settled their differences over the price that they pay to each other to resell their respective networks' airtime, ensuring that the two continue their relationship for the duration of their long-term reselling agreement.

Money-losing Clearwire, which operates a 4G Mobile WiMAX network, also gets minimum payments of $1 billion from Sprint in 2011 and 2012, but Clearwire declined to say whether it would use the money to resume an aggressive network buildout.

Late last year, the company launched an aggressive round of cost reductions to conserve cash in case it was unable to raise enough money to continue expanding its 4G network beyond markets covering 130 million people. The goal of 130 million people is set to be reached by the end of 2011. Money-raising options included selling off some of its unused spectrum.

Clearwire did say, however, that the two companies expect the agreement would "continue to drive the growth and collaboration of both companies' strategic 4G initiatives."

The amended agreement "adds some certainty to pricing," a Clearwire spokesman said. Previously, the two companies disagreed on the interpretation of some aspects of the agreement, signed in 2008, he explained. The new agreement, added Sprint, is an amendment to the two companies' existing wholesale agreement, "which automatically renews every five years."

Besides the new wholesale pricing terms, the amended agreement provides Clearwire a minimum payment of $1 billion from Sprint during 2011 and 2012 for 4G wholesale services. The payments reflect "minimum usage commitments of $300 million in 2011, $550 million in 2012, and $175 million in pre-payments for 4G wholesale services to be used in 2011, 2012 and beyond," Clearwire said.
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