US carriers Sprint and Clearwire cancel tie-up project

US firms Sprint Nextel and Clearwire have canceled their plan to combine the high-speed wireless networks they are building, an Associated Press report said.

The Associated Press report said the breakup is a blow to the much smaller Clearwire, which already has a network in some parts of the country based on the WiMax technology. Sprint's buildout, using the same technology, would have complemented Clearwire's coverage.

The breakup also casts a cloud over the future of WiMax, which is seen as a cost-effective alternative to cellular broadband, the report said.

Sprint is the largest carrier to embrace the technology.

Sprint and Clearwire agreed in July to work out a plan to combine their networks. They said they were not able to 'resolve complexities' in the deal but were still trying to coordinate on technical standards and roaming.

Analyst Craig Moffett at Sanford C. Bernstein called the news positive for Sprint, because it opens the possibility of the company getting out of WiMax to focus on its core cellular business, where it has been losing subscribers. He noted that Sprint's investment plans for WiMax wouldn't pay off in the form of free cash flow until 2014.