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June 15, 2007  |  Email This Article   |  Print This Article

Clearwire shares in the limelight after satellite hook-up

KIRKLAND (WiMAX Day). Yesterday Clearwire announced distribution agreements for bundled “triple play” voice, Internet and video services with the US-based satellite TV broadcasters DirecTV and EchoStar Communications.

According to a Clearwire press release, the agreements will allow the two satellite companies to offer Clearwire Internet services to their satellite customers. Moreover, the agreement also “contemplates” that Clearwire will be able to offer its subscribers video services from DirecTV and EchoStar.

Following the announcement yesterday, Clearwire stock rose 23.3% to $24.50 per share, and at mid-day today Clearwire shares were trading briskly at $24.80 per share.

The announcement and its impact on the share price lead financial analysts to take notice, and several upgraded their “buy” rating of Clearwire stock. According to an article in Business Week, JPMorgan analysts Thomas Lee said “This is an extremely attractive deal for Clearwire, dramatically enhancing its product distribution.”

Some analysts commented that they are finally coming to understand the Clearwire business and its’ potential. In an article in Forbes today, Christopher King, an analyst at Stifel Nicolaus, noted that the triple play announcement increases the viability of the long-term business model at Clearwire.

“By expanding the reach of our services through DirecTV and EchoStar, and by incorporating direct-to-home satellite video services in our own distribution channels, we believe we have an opportunity to significantly expand our business opportunity,” said Perry Satterlee, Clearwire president and chief operating officer.

Most cable and telecom providers already offer triple play services, which has greatly enhanced their products and valuations. With Clearwire, offering a triple play package will have a big impact on its subscriber growth, and will do the same for EchoStar and DirecTV.

While the deal between Clearwire, DirecTV and EchoStar may be looked at as a milestone in the WiMAX industry, given its size, however it is not the first and will not be the last.

In Australia, Unwired and Austar joined forces last year by combining their spectrum holdings so Unwired could expand its WiMAX services, and together they will pursue cross-marketing and offer triple play services.

Recently, lawyers around the world have been scratching their pens to paper forming similar deals between local WiMAX providers and cable operators, most notably in South America and Asia.

As more companies begin to understand the potential of WiMAX technology, it is expected that many more such deals will soon follow in the entertainment, media and broadcast industries.