Sprint reportedly in talks to buy out Clearwire

The company might acquire the other 49 percent of its WiMax partner that it doesn't yet own, according to news reports

Sprint Nextel is in negotiations to acquire the remainder of Clearwire, its 4G WiMax network partner, according to news reports.

Sprint owns about 51 percent of Clearwire's stock and is the main wholesale customer of its national WiMax network. Clearwire was formed in 2008 through a joint venture between Sprint and a predecessor of Clearwire, with investments from Google and several cable operators. But the relationship between the two companies has been complicated from the start.

Talks are ongoing on a possible Sprint buyout, which ultimately may not happen, according to stories in the Wall Street Journal and other news outlets, which cited unnamed sources.

Clearwire is saddled with billions of dollars in long-term debt and continues to lose money, but it has huge spectrum holdings in most major U.S. markets. Sprint, which itself has been struggling against larger rivals AT&T and Verizon Wireless, will soon be newly rich if Japan's Softbank wins approval to buy 70 percent of the company for US$20 billion.

Last month, a Clearwire investor called on the company to sell its spectrum for an estimated $9 billion to prevent Sprint from executing a buyout on the cheap. The investment company Mount Kellet Capital Management warned that Sprint wanted to weaken Clearwire until it could buy the rest of the company at a discount.

On Tuesday, Clearwire's stock on the Nasdaq (CLWR) rose $0.28 to close at $2.68. Sprint (S) fell $0.09 to $5.57 on the New York Stock Exchange.

Sprint and Clearwire declined to comment on the reports.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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