JP Morgan Comments on Clearwire's WiMax, LTE Funding Agreements

JP Morgan has published a research report on Clearwire CLWR after the company reported reaching a new agreement on WiFax and LTE funding. In the report, JP Morgan writes, "Clearwire will receive a total of $926m for unlimited WiMAX service from Sprint for 2012 and 2013, $600m cash of which will be paid in 2012. This is less than we expected Sprint to pay Clearwire over the same time period for WiMAX, but the certainty has significant value. We had modeled $694m in wholesale revenue for CLWR in 2012 vs this ~$600m from Sprint. Sprint could also start selling more WiMAX devices or at lower prices to better utilize the network. We do not expect WiMAX coverage to be extended. Finally, the agreement has usage based pricing for WiMAX services in 2014 and beyond and gives Sprint access to the WiMAX network through 2015." In regards to LTE, JP Morgan writes, "Sprint has signed on to CLWR's planned 2.5 GHz TD-LTE network. LTE pricing will be usage based for the long-term. Sprint expects to launch devices to support TD-LTE in 2013. Sprint will pay CLWR up to $350m in pre-payments for LTE capacity as long as CLWR meets build requirements, and total payments could exceed $350m based on usage." JP Morgan maintains its Neutral rating on Clearwire, which is currently trading up $0.47 from yesterday's $1.78 closing price.