SPRINT NEXTEL, the number three US mobile provider, has agreed to pay up to $1.6 billion to Clearwire in the next four years, including a network pact and a potential equity infusion, easing concerns about a liquidity crisis at Clearwire.
Clearwire saw its shares rise 18 per cent after it said yesterday that it will be able to make a $237 million debt interest payment due December 1st.
The stock had closed up 13 per cent the day before after a Reuters report that Sprint was expected to reach a funding agreement for Clearwire. Wireless service provider Clearwire, which is majority owned by its biggest customer Sprint, last month told the Wall Street Journal it might skip the interest payment to conserve cash as it needs almost $1 billion in new financing to keep operating and fund a network upgrade.
At the time analysts said the comment was likely a negotiating tactic aimed at forcing Sprint’s hand. Sprint, which itself recently raised $4 billion from a bond sale, committed to a Clearwire equity offering of up to $347 million and said it would pay Clearwire about $1.28 billion for using its wireless network.– (Reuters)
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