Deal comes just weeks after Google offloaded its stake in struggling 4G provider
Cricket Communications, a US mobile network, has entered into a five-year wholesale agreement with wireless Internet service provider Clearwire.
The deal will see Cricket use Clearwire’s forthcoming Long Term Evolution (LTE) network to “provide capacity off-load services to supplement Cricket’s own LTE network.”
Clearwire had been struggling of late with substantial losses and weak revenues for the previous quarter. Google, seeing signs of trouble, offloaded its 6.5 per cent stake in the company at a major loss last month. Having initially invested $500 million (£319m), Bloomberg reports that the stake was bought up by Credit Suisse for a comparatively meagre $66.5 million (£42.4m).
Part of the reason for Clearwire’s lagging performance was its decision last year to switch from WiMax, which it pioneered in 2008, to LTE. The change was expensive but necessary to keep up with Verizon, T-Mobile and AT&T who had all opted for and built their own HSPA+ and LTE networks.
The company received a boost when the Federal Communications Commission said it would block rival LightSquared as it interfered with navigation gear, rendering Clearwire the only US 4G wholesale provider.
Clearwire has even more cause for celebration now as Cricket becomes the second mobile operator after Sprint to use its LTE network.
“This long-term partnership with Cricket is a key step forward in the development of Clearwire’s wholesale LTE business model,” said Erik Prusch, Clearwire’s CEO and President. “We have always believed that our unmatched spectrum portfolio offers a compelling resource that can and will enable wireless operators to thrive in the 4G marketplace of the future.”
Cricket, which is owned by Leap Wireless, began rolling out its own LTE network in late 2011 with plans to cover two-thirds of its existing 3G network within two to three years.
“The high-speed 4G LTE networks we are deploying will complement our robust 3G network and allow us to continue innovating value for our Cricket customers,” said Doug Hutcheson, president and CEO of Leap Wireless. “We believe this agreement with Clearwire provides us with an attractive option to supplement our own LTE build-out strategy and gives us the flexibility to access additional 4G capacity where needed as data-centric devices continue to become more popular.”
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