The next generation of wireless networks is collectively known as 4G. At the forefront of this movement to faster mobile speeds is Sprint, which launched the first 4G device: The EVO4G. The curious thing is that Sprint does not own their 4G network, they are simply renting it from a little company called Clearwire. Sprint has a 54% stake in Clearwire and the relationship between the two companies is odd at best, with both going after the same set of customers while sharing the same 4G network.
While Clearwire is at the forefront of mobile technology, they are in the red as far as revenue. Even as their subscribers grow, they are facing a mountain of debt. They are set to cut 15% of their workforce, will stop expansions in all areas outside of those needed to hit its original launch goals, and delay the launch of some handsets. By making these cuts, they stand to save about $400 million over the next couple of years.
One would think that, given Sprint’s dependence on the Clearwire network, they would look into acquiring Clearwire outright, but as GigaOm points out, it’s complicated. Clearwire stock fell about 10% after the announcement as investors are concerned that these cutbacks will hurt growth. There is also a concern that Clearwire won’t be able to secure the financing it needs to expand.