Sprint Nextel hints at funding Clearwire

Sprint Nextel (NYSE:S) said it could use proceeds from a bond offer to fund Clearwire (NASDAQ:CLWR). Clearwire's shares closed up 8 percent on Friday, after increasing as high as 28 percent.

Sprint sold $4 billion in a private debt offer on Friday, and the operator said funding Clearwire could be a possible use of the proceeds. However, Sprint executives later told debt investors that its mention of Clearwire didn't indicate an increased willingness to fund its partner.

Research and asset management firm KDP Investment Advisors has its doubts about Sprint giving more money to Clearwire. "Specifically, they said they were not going to invest any more that would put them above a 50 percent voting share in Clearwire," said Scott Dinsdale, a vice president for KDP Investment Advisors, told Reuters.

Sprint owns a majority stake in Clearwire but holds less than 50 percent of voting rights in the company, as a way to insulate itself from a Clearwire default. Dinsdale, who participated in an investor call held by lead manager JPMorgan to discuss the debt offering, said Sprint said on the conference call that it only included Clearwire on the list of possible funding for legal reasons.

Mizuho analyst Michael Nelson said Sprint's inclusion of Clearwire does provide a "glimmer of hope."

During Clearwire's third-quarter conference call last week, CEO Erik Prusch said "there remains a gap" between Clearwire and Sprint, and he said he hopes the companies will be able to reach an agreement on possible funding and network roaming. Sprint last week disclosed a non-binding agreement between Sprint and Clearwire that will cover the design of Clearwire's planned LTE network.

Clearwire is looking for up to $300 million to fund its operations and about $600 million for its LTE network upgrade.

Sprint itself needs financing to upgrade its network and pay for the high cost of its agreement with Apple to sell the iPhone. 

For more:
- see this Reuters article

Related articles:
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Clearwire ditches postpaid service, offers prepaid unlimited at $50
Report: Sprint close to extending Clearwire wholesale deal
Sprint inks deal with Clearwire, predicts up to $8B in value from iPhone
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Clearwire adds 1.9M wholesale subs in Q3
Clearwire to deploy LTE - if it can get additional funding

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