Sprint - Nextel 2012 Annual Report Download - page 168

CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We are a leading provider of fourth generation, or 4G, wireless broadband services. We build and operate next generation mobile broadband
networks that provide high
- speed mobile Internet and residential Internet access services in communities throughout the country. Our current 4G
mobile broadband network operates on the Worldwide Interoperability of Microwave Access technology 802.16e standard, which we refer to as mobile
WiMAX. In our current 4G mobile broadband markets in the United States, we offer our services through retail channels and through our wholesale
partners. Sprint Nextel Corporation, which we refer to as Sprint, accounts for substantially all of our wholesale sales to date, and offers services in each
of our 4G markets.
As of December 31, 2012, we offered our services in 88 markets in the United States. Internationally, as of December 31, 2012, we completed the
sale of our operations in Belgium, Germany and Spain. The results of operations of these international entities prior to their sale are separately
disclosed as discontinued operations.
We need to greatly expand our revenue base by increasing sales to our existing wholesale partners, primarily Sprint, and bring on additional
wholesale partners with substantial requirements for additional data capacity to supplement their own services. To be successful with either, we
believe it is necessary that we deploy Long Term Evolution, or LTE, technology, which is currently being adopted by most wireless operators globally
including Sprint, as their next generation wireless technology, on our network.
We have begun deployment of our LTE network and have 1,000 sites on air as of December 31, 2012. We expect to have approximately 2,000 LTE
sites on air by the end of June 2013, which will satisfy the initial LTE prepayment milestone under the terms of our recently amended wholesale
agreements with Sprint. Subject to the availability of funding, including proceeds of the interim financing arrangement provided by Sprint (see below),
we plan to have approximately 5,000 sites on air by the end of the year. Under the amended wholesale agreements with Sprint, we are required to
expand our LTE network to 5,000 sites by no later than June 30, 2014 and 8,000 by the end of 2014.
Proposed Sprint Merger
Merger Agreement
On December 17, 2012, we entered into an agreement and plan of merger with Sprint, which we refer to as the Merger Agreement, pursuant to
which Sprint agreed to acquire all of the outstanding shares of Clearwire Corporation Class A and Class B common stock, which we refer to as Class A
Common Stock and Class B Common Stock, respectively, not currently owned by Sprint, SOFTBANK CORP., which we refer to as Softbank, or their
affiliates. At the closing, the outstanding shares of common stock will be canceled and converted automatically into the right to receive $2.97 per share
in cash, without interest. Our stockholders will be asked to vote on the adoption of the Merger Agreement at a special meeting that will be held on a
date to be announced. Consummation of the transactions under the Merger Agreement, which we refer to as the Proposed Merger, is subject to a
number of conditions precedent, including, among others: (i) the adoption of the Merger Agreement by the holders of at least 75% of the outstanding
shares of our common stock entitled to vote on the Proposed Merger, voting as a single class, and at least a majority of the outstanding shares of our
common stock not held by Sprint, SoftBank and their respective affiliates, voting as a single class, at a duly called stockholders' meeting, which we
refer to as the Clearwire Stockholder Approval, (ii) the receipt of the Federal Communications Commission, which we refer to as the FCC, approvals
required to consummate the Proposed Merger, (iii) the absence of any order enjoining the consummation of, or prohibiting, the Proposed Merger; (iv)
the non
- occurrence of any event having a material adverse effect from the date of the Merger Agreement to the closing of the Proposed Merger, and
(v) the consummation by Sprint of the pending merger between Sprint and SoftBank and certain affiliates thereof, which we refer to as the SoftBank
Transaction, or an alternate transaction thereto.
The Merger Agreement contains termination rights for the benefit of Sprint and Clearwire and further provides that Sprint will be required to pay
us a termination fee of $120.0 million under certain specified circumstances of termination of the Merger Agreement. Any obligation to pay such
termination fee will be satisfied by the cancellation of $120.0 million of Notes, which we refer to as the Sprint Termination Fee, which are described
below. In the event we are entitled to receive the termination fee, in certain instances, we may also be entitled to receive from Sprint a supplemental
prepayment for LTE services on January 15, 2014 in the amount of $100.0 million, conditioned upon the completion of site build
- out targets
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1.
Description of Business