"We have assumed the same basic deal terms for both LightSquared and Clearwire in the analysis that follows: We assume partners pay Sprint $2,400 per base station per month," says Jonathan Chaplin, Credit Suisse analyst.
LightSquared and Clearwire are expected to pay 50 percent in cash and 50 percent in capacity. "We assume $700 per site per month per partner in incremental operating expenditure," said Chaplin.
Chaplin assumes Sprint incurs additional upfront capital expenditure of $2.2 billion in total ($1.4 billion for LightSquared; $0.8 billion for Clearwire), with the bulk of the spend occurring in 2012 and 2013.
In some ways, the deal represents a bit of a turn around for Sprint and Clearwire. Up to this point, Sprint has been relying on Clearwire to build out the fourth generation network for Sprint. Now Sprint will be helping Clearwire, at least in some instances. The network sharing deal with LightSquared is a bit more straightforward capacity deal for LightSquared, which needs to rapidly construct a national network.
"We assume LightSquared leases access to all 45,000 Sprint base stations, giving them a nationwide network," says Chaplin. "We assume they lease base stations at the pace that Sprint installs them, with lease payments starting at the beginning of 2012 and covering all 45,000 base stations by the end of 2013," said Chaplin.
"We assume Clearwire leases 28,000 base stations to expand coverage to another 70 million potential customers and replaces some of their existing base stations," said Chaplin.
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