May 7 (Bloomberg) -- Sprint Nextel Corp. will combine its high-speed wireless business with Clearwire Corp., creating a $14.5 billion company and reviving plans to build out the first national WiMax network.

WiMax is a standard for wireless laptops and mobile phones that can transmit data up to five times faster than today's technology. Intel Corp., Comcast Corp., Time Warner Cable Inc., Google Inc. and Bright House Networks will invest $3.2 billion in the venture, the companies said today.

Sprint Chief Executive Officer Daniel Hesse teamed with wireless pioneer Craig McCaw to gain a leg up on AT&T Inc. and Verizon Wireless by offering faster service. The venture's funding will help expand network coverage to as many as 140 million people by 2010, letting Hesse scale back spending at Sprint after losing more than a million customers last year.

``The major issue for Sprint was the money,'' ABI Research analyst Nadine Manjaro said in an interview from Kansas. ``If Comcast, Google and Time Warner invest the money, you'll definitely see it taking off.''

Sprint fell 3 cents to $9.16 at 4:01 p.m. in New York Stock Exchange composite trading. Clearwire dropped 24 cents to $16.22 on the Nasdaq Stock Market.

Sprint and Clearwire will be first to market with a faster network technology by enlisting companies such as Google and Intel as backers to take on AT&T and Verizon, the two largest U.S. mobile-phone companies. Sprint is the only one of the three carriers to commit to the WiMax technology, which risks limiting the standard to a smaller pool of users.

Competition

While AT&T and Verizon are backing a rival technology called Long Term Evolution, they say it may not be ready for at least two years. Both companies fell in New York trading.

``In terms of economies of scale for WiMax, Sprint's deal is the biggest deal out there,'' Yankee Group analyst Phil Marshall said in an interview from Boston. ``The WiMax industry is holding out very high hopes for the Sprint network to be successful.''

WiMax offers wider coverage than today's Wi-Fi systems, which deliver Internet access to smaller areas such as buildings and parks. The standard is designed to carry data as fast as cable or phone line connections by making more efficient use of radio frequencies than existing technologies.

Arvind Sodhani, president of Intel's investment arm, initiated talks on the new agreement after a previous deal between Sprint and Clearwire failed, according to a person familiar with the matter. Sodhani was a board member at Kirkland, Washington-based Clearwire, founded by McCaw, from August 2006 until last December.

Intel's Stake

For Intel, the world's largest semiconductor maker, WiMax is a way to entice consumers and businesses to buy new laptop computers. Intel has relied on earlier wireless technologies to spur sales of its Centrino laptop chips. The company has updated the Centrino products every year since their debut in 2003, adding capabilities such as faster Wi-Fi transmitters.

Intel, the largest shareholder in Clearwire with a 20 percent stake, will begin including WiMax radio chips in Centrino products in the second half of this year.

Hesse, 54, left Sprint spinoff Embarq Corp. in December to replace ousted chief Gary Forsee. He has since started new advertising campaigns, discounts on service and revived talks with Clearwire after a previous deal collapsed the month after Forsee's departure. Next he may seek to sell the Nextel business, undoing a $36 billion acquisition Forsee led three years ago, the Wall Street Journal said this week.

New Structure

Sprint will own about 51 percent of the new company, which will keep the Clearwire name. Existing Clearwire shareholders will have about 27 percent and the investors as a group will hold about 22 percent. The group's contribution values the whole company at about $14.5 billion.

The investment from the cable and technology companies will be based on a target price of $20 a share for Clearwire's stock, the companies said. The final price, which will be adjusted based on trades in the new Clearwire's common stock, will be no higher than $23 and no less than $17.

Clearwire and Sprint had scrapped a WiMax alliance in November after agreeing in July to team up. The new accord may bolster Clearwire, which hasn't posted a profit since its initial public offering in March 2007.

McCaw founded Clearwire in 2003. Before that, he built McCaw Cellular Communications Inc. into the largest mobile-phone company in the U.S., selling the carrier to AT&T for about $12 billion in 1994.

Extra Money

With up to $2.3 billion in extra funding, Clearwire could expand the network to eventually reach more than 200 million people, CEO Benjamin G. Wolff said on a conference call today. The company could borrow the money or recruit more investors, he said. Without the additional funds, Clearwire can still make the network available to 110 million by mid-2010.

Sprint will keep working on its WiMax network this year, Hesse told reporters. Clearwire will reimburse Sprint for some of those costs, he said.

Morgan Stanley and JPMorgan Chase & Co. advised Clearwire, along with law firms Davis Wright Tremaine LLP and Kirkland & Ellis LLP. Sprint received counsel from Citigroup Inc. and Lehman Brothers Holdings Inc., and law firms King & Spalding LLP and Jones Day.

Comcast and Time Warner Cable, which compete with AT&T and Verizon Communications Inc. for land-line phone and Internet connections, can use WiMax to challenge their rivals' mobile- phone services.

Cable Contribution

Comcast, based in Philadelphia, will contribute $1.05 billion to the venture, and Intel will add $1 billion. The network will get $550 million from Time Warner Cable, $500 million from Google and $100 million from cable operator Bright House Networks.

In a separate transaction 90 days after the deal closes, Trilogy Equity Partners will invest $10 million on the same pricing terms as the other investors. The firm was co-founded by John Stanton, the former Western Wireless Corp. CEO.

The transaction should be completed during the fourth quarter, subject to approval by Clearwire stockholders, U.S. antitrust regulators and the Federal Communications Commission.

Clearwire's board will have 13 members, including seven directors to be named by Sprint; four named by the strategic investors; one named by Eagle River, the investment company controlled by McCaw, Clearwire's chairman; and one independent member to be nominated by the new company's nominating committee.

To contact the reporters on this story: Crayton Harrison in Dallas at tharrison5@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net

Last Updated: May 7, 2008 16:10 EDT