Sprint - Nextel 2012 Annual Report Download - page 208

Table of Contents
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Relationships among Certain Stockholders, Directors, and Officers of Clearwire —
Sprint, through two wholly - owned subsidiaries, Sprint
HoldCo and SN UHC 1, Inc., owns the largest interest in Clearwire with an effective voting and economic interest of approximately 50.44% and Intel
owns voting and economic interest in Clearwire of 6.4%. After the conversion of their Class B Common Interests and corresponding number of Class B
Common Stock into Class A Common Stock, Comcast and Bright House together own voting interest in Clearwire of approximately 6.6% at December
31, 2012.
As of December 31, 2012, Eagle River held warrants to purchase 375,000 shares of Class A Common Stock at an exercise price of $3.00 per share
with an expiration date of November 13, 2013.
Clearwire, Sprint, Intel, Comcast and Bright House are party to the Equityholders
’ Agreement, which sets forth certain rights and obligations of
the equityholders with respect to governance of Clearwire, transfer restrictions on our common stock, rights of first refusal and pre
- emptive rights,
among other things. In addition, we have also entered into a number of commercial agreements with Sprint, Google and Intel, which are outlined below.
4G MVNO Agreement — We have a non
- exclusive 4G MVNO agreement, which we refer to as the 4G MVNO Agreement, with Comcast MVNO
II, LLC, TWC Wireless, LLC, Bright House and Sprint Spectrum L.P.,which we refer to as Sprint Spectrum. We sell wireless broadband services to the
other parties to the 4G MVNO Agreement for the purposes of the purchasers' marketing and reselling our wireless broadband services to their
respective end user subscribers. The wireless broadband services to be provided under the 4G MVNO Agreement include standard network services,
and, at the request of any of the parties, certain non
- standard network services. We sell these services at prices defined in the 4G MVNO Agreement.
S print Wholesale relationship
In November 2011 we entered into the November 2011 4G MVNO Amendment. As a result, the minimum payments under the amendment to the
4G MVNO agreement entered into with Sprint in April 2011 were replaced with the provisions of the November 2011 4G MVNO Amendment. Under the
November 2011 4G MVNO Amendment, Sprint Spectrum is paying us $925.9 million for unlimited 4G mobile WiMAX services for resale to its retail
subscribers in 2012 and 2013, approximately two
- thirds of which was paid for service provided in 2012, and the remainder will be paid for service
provided in 2013. Of the $925.9 million, $175.9 million will be paid as an offset to principal and interest due under a $150.0 million promissory note (as
described in the Sprint Commitment Agreement section below) issued by us to Sprint. As part of the November 2011 4G MVNO Amendment, we also
agreed to: the elimination of device minimum fees after 2011; and usage based pricing for WiMAX services after 2013 and for LTE service beginning in
2012. We also agreed that Sprint Spectrum may re
- wholesale wireless broadband services, subject to certain conditions and we agreed to operate our
WiMAX network through calendar year 2015.
Subject to the satisfaction of certain network build
- out conditions, Sprint agreed to prepay us up to another $350.0 million in installments once
certain milestones are achieved for future services to be provided to Sprint over our LTE network. The amount and nature of the prepayment is subject
to reduction in certain circumstances, including in the event that we fail to meet initial LTE deployment build targets by June 30, 2013, or if we fail to
meet certain network specifications. We also agreed to collaborate with Sprint on LTE network design, architecture and deployment, including site
selection, and Sprint committed to use commercially reasonable efforts to support certain specified chipset ecosystems and to launch devices to roam
on our LTE network, including laptop cards and smartphones, in 2013. The November 2011 4G MVNO Amendment also provides for additional
conditions on any sale of core spectrum assets necessary to operate our WiMAX and LTE networks, including agreeing to allow Sprint Spectrum an
opportunity to make offers to purchase our excess spectrum in the event that we propose to sell such spectrum.
In addition to the $150.0 million received from Sprint relating to the Sprint Promissory Note in January 2012, for the twelve months ended
December 31, 2012 and 2011, we received $537.3 million and $434.3 million respectively from Sprint for 4G broadband wireless services. The amounts
received from Sprint for 4G broadband wireless services for the year ended December 31, 2012 includes
$76.6 million for services provided in 2011 and
$10.8 million representing the final portion of the prepayment for future services beyond the minimum commitment provided for in the amendment to
the 4G MVNO Agreement entered into in April 2011.
During the twelve months ended December 31, 2012, wholesale revenue recorded attributable to Sprint comprised approximately 36% of total
revenues and substantially all of our wholesale revenues.
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