Intel tie-up gives Unwired funds to expand nationwide

Telecom Asia, Nov, 2005 by Lachlan Colquhoun

Chipmaker Intel has continued its support for WiMAX technology with a A$27.9 million ($21 million) investment in Australian wireless broadband carrier Unwired Australia.

Unwired shareholders have accepted Intel's investment through a convertible note issue equivalent to just over 25% of the company, which will use the capital injection to fund its expansion outside of its current footprint of Sydney.

The Unwired deal is Intel's second such investment in WiMAX, coming after a similar deal with US company Clearwire Corp, which is offering pre-WiMAX services in several US cities.

According to Unwired chief executive David Spence, Intel's motivation was purely strategic as a way of promoting the development of WiMAX in Australia.

Under the deal, Unwired will use Intel WiMAX chips as it transitions from proprietary technology to standard WiMAX. Unwired currently uses technology from another Intel affiliate, Navini.

"It's all about working with us to make Australia a showcase for WiMAX," said Spence. "Getting right into the heart of Intel's R&D is what we have been able to do."

From Intel Capital, codirector for the Asia Pacific region Varun Kapur says the rapid growth in the Australian broadband market made it a "pretty attractive" place to invest and he believed Intel and Unwired's interests were entirely compatible. "It's a model that other leading service providers could and should replicate," says Kapur.

The Intel deal comes at just the right time for Unwired, which had been struggling to raise the funds it needs to become a national player. While the company has made inroads into the Sydney market, and had around 28,000 subscribers at the end of June, it needs 70,000 to break even and has plans to roll-out its service Adelaide, Brisbane, Perth and Melbourne.

Unwired recently spent A$15 million ($11.3 million) on a spectrum swap agreement with regional satellite provider Austar, acquiring licenses in the 2.3- and 3.5- GHz bands which are at the core of WiMAX standard.

The two companies also have an agreement to ensure any new network rollouts will be compatible with the WiMAX standard, which is expected to be ratified later this year or early 2006.