Sprint Nextel (NYSE:S) supports a wholesale agreement between Clearwire (NASDAQ:CLWR) and T-Mobile USA, according to a Goldman Sachs analyst who recently met with Sprint executives.
"Sprint indicated they have encouraged a wholesale deal," wrote Goldman analyst Jason Armstrong in a Dec. 1 research note, after a meeting with Sprint CEO Dan Hesse and CFO Bob Brust. "Sprint would support a T-Mobile equity infusion into Clearwire," he wrote, but said that support would depend upon the size of the cash infusion.
Representatives from Sprint, Clearwire and T-Mobile declined to comment.
Clearwire CEO Bill Morrow said in September that the mobile WiMAX provider was holding negotiations with T-Mobile, but declined to comment on the status of the talks. He said Clearwire's preferred way to get more funding was via an equity investment from a service provider that would rent space on its network at a preferred rate, similar to the deal Sprint has. Sprint has a 54 percent stake in Clearwire.
However, Clearwire announced on Thursday it would issue new debt offerings to raise funds. Clearwire priced the notes for a total of $1.33 billion. TownHall Investment Research noted that Clearwire's decision to issue new debt offerings possibly indicates the company was unable to reach an agreement with T-Mobile.
Clearwire warned last month that if it did not get more funding it could run out of cash by the middle of 2011; the company also cut 15 percent of its workforce amid a range of other cost-saving measures.
The debt offering by Clearwire could take some pressure off Sprint, which had $15.6 billion in net debt on its own books at the end of the third quarter. Sprint has not yet committed to pumping more money into Clearwire. Sprint has 30 days to decide if it wants to purchase $585 million in debt that could be paid off in shares. Sprint could also give Clearwire another equity investment.
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