Wireless broadband provider Clearwire said late Tuesday that it is has racked up another $920 million in debt to help it finance the deployment of its nationwide 4G wireless network.
The company had already nabbed $1.85 billion of senior secured notes due in 2015 to help it pay off an existing $1.4 billion debt payment. In total, Clearwire has raised nearly $2.8 billion in debt and equity in the past few weeks.
Earlier this month, some of the company's investors also kicked in an additional $1.5 billion in funding. Sprint Nextel, Intel, Comcast, and Time Warner Cable all contributed to the additional funding. Google, which also invested in Clearwire, did not contribute to the latest round.
Clearwire said earlier this year that it needed $2 billion to $2.3 billion in additional funding to ensure its network could reach at least 120 million people by the end of 2010.
Building new telecommunications networks is not cheap. And many analysts have said they believe that Clearwire will actually need even more money to build its network.
As of the end of the third quarter, Clearwire reported its network was up and running in 13 markets, including Chicago, Baltimore, Portland, and Philadelphia. The company will expand this list next year as it tries to meet that 120 million customer goal.
Even as it builds its network, Clearwire is struggling to sign up new customers. In the third quarter, it signed up a total of 173,000 new subscribers bringing its total subscribership to 550,000. This figure includes consumers who have signed up for service via Clearwire's reseller partners, Sprint, Comcast, and Time Warner Cable. It also includes customers who had already signed up for Clearwire's pre-WiMax service that offered fixed wireless broadband.
A broader network footprint should help Clearwire win more customers. And the company's management team says it is confident that this latest funding will finally be enough to help the company move forward with its plan.
"With this latest tranche of additional funding, we have not only exceeded the amount of capital that we have previously stated we needed to fully fund our business plan, but we have also secured additional capital that will allow us to expand more aggressively by covering more people and with more capacity than we had previously planned," Bill Morrow, CEO of Clearwire, said in a statement.
Even with an expanded network and plenty of cash to build it, Clearwire's future is still somewhat uncertain. The company faces tough competition in the wireless broadband market. Not only is Verizon Wireless, the nation's largest cell phone provider, building its own 4G wireless network using a competing technology known as LTE, but other service providers such as T-Mobile USA are upgrading their networks with advanced 3G technology that matches Clearwire's WiMax in terms of download speeds.
The advantage these souped-up 3G networks have over Clearwire is scale. They can leverage a deep device and equipment ecosystem, helping reduce the overall cost of deploying networks and offering services. By contrast, WiMax is a niche technology. Some service providers around the globe are using WiMax to provide fixed wireless broadband. Others, like carriers in South Korea, are using a pre-WiMax standard to offer service. But Clearwire is one of the few companies using the standard version of WiMax to build a large mobile network.
The company has backers, such as Intel, which can drive some demand by embedding WiMax chips into laptops. But so far, there haven't been compelling mobile products with WiMax built-in.