09:44 AM

Sprint Directors Resign From Clearwire Board

Clearwire says the three resignations stem from an 'abundance of caution' related to recent changes in antitrust laws.

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Clearwire, which is rolling out a nationwide 4G wireless network with major investor Sprint Nextel, has announced that three directors appointed by Sprint have resigned from the Clearwire board.

Clearwire said Thursday the resignations came out of an "abundance of caution," due to recent changes in antitrust laws. However, Sprint, which had a total of seven members on Clearwire's 13-member board, reserved the right to fill the three vacant seats at a later date.

"Clearwire was informed by Sprint that the decisions to resign were made out of an abundance of caution to address questions raised by Clearwire regarding new developments in antitrust law," the company said.

The directors who left the board include Daniel R. Hesse, Keith O. Cowan, and Steven L. Elfman. The three men were all officers of Sprint Nextel.

At least one antitrust lawyer questioned the reason for the resignations.

"There's nothing in antitrust law that requires Sprint to remove its directors from Clearwire's board given its majority ownership of Clearwire," Michael Swartz, an antitrust lawyer at Schulte Roth & Zabel, told the Dow Jones news agency. Sprint holds a 54% stake in Clearwire.

A possible explanation for the board changes could be that Sprint is making room to bring in another investor. Clearwire and Sprint are spending hundreds of millions of dollars rolling out a 4G network based on WiMax. At the same time, other major carriers are committing to another 4G technology called long-term evolution (LTE).

Early this month, Sprint and T-Mobile USA, the third and fourth largest U.S. wireless carriers, respectively, were reported to be in talks to have T-Mobile invest in Clearwire. As of the end of the second quarter, Clearwire had 1.7 million subscribers on its WiMax network, which covered about 56 million people in the United States. More than half of the subscribers were wholesale customers.

In the second quarter, Clearwire reported that revenue rose 93% year over year to $122.5 million, but net losses, due mostly to deployment costs, rose to $125.9 million from $73.4 million a year ago.

In the meantime, Verizon Wireless and AT&T, the first and second largest wireless carriers in the United States, respectively, are preparing to launch 4G networks based on LTE. Verizon is expected to begin deployment this year and AT&T next year.

Clearwire has said that it is agnostic when it comes to 4G technology, which all the carriers see as providing much faster Internet speeds than their current 3G networks. Clearwire last month said that it would start testing this fall an LTE network in Phoenix, Ariz., with Chinese telecommunications equipment maker Huawei Technologies. Clearwire is testing LTE alone and in "multiple coexistence scenarios" with WiMax.

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