Sprint Declines Increased Clearwire Investment

Sprint Nextel let a Jan. 2, 2011 deadline pass without exercising its right to buy $760 million of Clearwire Corp convertible debt, ruling out that source of funding for Clearwire. It's a bit hard to tell what the decision means, beyond the obvious unwillingness on the part of Sprint to put more money into a venture that has become a source of tension.

Sprint already owns about 56 percent of Clearwire and uses its network to offer 4G services. Some might interpret the decision as a sign Sprint is not interested in buying the remainder of Clearwire. That might not necessarily be the case, though. If Sprint believes Clearwire will encounter difficulty, Sprint might be able to buy the remaining portions of the company for less money.

On the other hand, Sprint might have other ideas about where to deploy additional capital to support its 4G efforts. If Clearwire proceeds with its plans to sell off excess wireless spectrum, Sprint could purchase that spectrum and build its own LTE network.

http://www.reuters.com/article/idUSN0317604520110103