NEW YORK (WiMAX Day). Sprint Nextel and Clearwire Corporation announced today that they have entered into a definitive agreement to combine their respective wireless broadband and WiMAX businesses. The business combination will have a total value of approximately USD 14.5 billion, and will take the form of a new company, but will keep the Clearwire name.

The two companies first announced an intention to combine their networks last year, and when negotiations stalled, many industry analysts ballyhooed it as a sign of the imminent demise of WiMAX. However, according to Benjamin G. Wolff, chief executive officer of Clearwire, the delay was justified. “Given the complexity of this transaction, we have taken the time and effort to do it right, by thoughtfully leveraging the resources and opportunities that we and our investors are bringing to the table.”

Wolff will join Barry West, currently Sprint’s Chief Technology Officer and XOHM business unit leader, to head the “all-star team” of the new Clearwire. According to a joint press release, the new business “will be focused on expediting the deployment of the first nationwide mobile WiMAX network,” which will deliver four times the performance of legacy wireless networks at one-tenth the cost.

The new Clearwire will welcome a combined investment of USD 3.2 billion from several key industry players, including Intel Capital, Google, Comcast, Time Warner Cable and Bright House Networks. Upon completion of the transaction, Sprint will own approximately 51 percent of the new company. Existing Clearwire shareholders will own some 27 percent, and the new group of investors will receive roughly 22 percent of the company.

In a conference call today, Dan Hesse, president and chief executive officer of Sprint, underscored the “win-win” benefit of the transaction. “For Sprint shareholders, this is an opportunity to unlock and bring visibility to the value of our significant spectrum assets, technology and expertise, by leveraging the technology, applications and distribution strengths of our investors, who together command nearly a half-trillion dollars in market capitalization,” said Hesse.

Sprint will contribute its 2.5 GHz spectrum assets to the new venture, along with “certain hardware, software and all of its WiMAX-based trademarks and other WiMAX-related intellectual property.” It also will leverage Sprint’s existing infrastructure, including towers, fibre network and IT support.

The new Clearwire will have more than 40 billion MHz POPs in the key US markets through the combined spectrum assets of Sprint and Clearwire. This will allow the company to build a substantial WiMAX network in America, and is expected to reach up to 140 million people by the end of 2010. This network will put the new Clearwire “two years ahead of the competition,” Hesse noted.

The new investors in the company are expected to contribute substantially to the success of the business. Intel will bring its embedded WiMAX chips and “will market the new company’s service in association with Intel’s performance notebook PC brand.” According to Paul Otellini, Intel president and CEO, “this agreement is an historic step forward for WiMAX as it represents the first nationwide deployment of a next-generation mobile broadband Internet in the US.”

Google has committed to develop specific applications for mobile WiMAX devices for Internet and advertising services, and Google will become the main search provider of the new Clearwire services. The new Clearwire also will jointly develop “Powered by Google” open architecture devices for the network. Eric Schmidt, chief executive officer and chairman of Google, commented that the “planned WiMAX network will increase the ability for users to get high-speed broadband anytime, anywhere.”

Comcast, Time Warner Cable, and Bright House Networks will each benefit significantly from the investment, as each company will enter into wholesale agreements with the new Clearwire, enabling them to become MVNO providers of new Clearwire mobile WiMAX service. “We’re committed to giving our customers more control over how and where they can easily connect to what’s important to them [and] to add mobility to our offerings when our customers demand it,” said Glenn Britt, Time Warner Cable’s president and chief executive officer.

It is expected that the transaction will be completed in Q4 2008, subject to various closing conditions.