Sprint Nextel Corp. (S) CEO Dan Hesse is following through on a promise he made in September – that his company would pump more money into WiMAX partner Clearwire Corp. if needed. He also reiterated that stand in the wireless carrier’s recent earnings call.
The Wall Street Journal on Monday reported the money is needed and that Sprint has agreed to put at least $1 billion more into Clearwire.
The newspaper said an announcement of the new investment could come as soon as this week. To be sure, Sprint’s ability to funnel $1 billion toward Clearwire raises eyebrows – on Oct. 29, Sprint reported a third-quarter loss of $478 million. That loss – and the pending Clearwire investment – came as Sprint has agreed to buy affiliate iPCS for $426 million in cash (it’s also assuming $405 million in debt).
Wall Street must like the idea, though. By 11:13 a.m. Eastern, Sprint’s stocks had soared more than 10 percent.
Meanwhile, other Clearwire investors – Bright House Networks, Comcast, Intel and Time Warner Cable – also are pitching in with about $500 million more. Notably absent from the list is Google. The Journal did not say why the Internet giant apparently is not participating.
In September, Clearwire CEO Bill Morrow said he wanted to find new funding by the end of the year. And it was uncertain that any of the company’s current investors would be able to help, since they’ve already had to write down their investments in the provider. But Sprint, which owns the majority of the Clearwire joint venture, said it would come to Clearwire’s rescue if matters grew that dire.
At the same time, Comcast executives said their company wasn’t obligated to give more money to Clearwire. That statement seemed to put Comcast out of Clearwire’s reach for additional funds, but the cable operator appears to have reconsidered.