May 7 (Bloomberg) -- Sprint Nextel Corp. is combining its planned high-speed wireless network with Clearwire Corp., creating a $12 billion venture with funding from technology and cable companies, people familiar with the decision said.

Companies such as Intel Corp., Comcast Corp., Time Warner Cable Inc. and Google Inc. will invest more than $3 billion in the network, which uses a technology called WiMax, said the people, who asked to be anonymous because the talks are private.

The agreement lets Sprint scale back spending after an exodus of mobile-phone customers hurt profit last year. It also builds support for WiMax, which can blanket whole cities with network coverage. The technology could help Sprint compete with larger rivals AT&T Inc. and Verizon Wireless by providing faster Internet access.

``This could remove a potential distraction'' for Sprint, said Michael Nelson, an analyst at Stanford Group Co. in New York. ``They need to increase their focus on fixing their core business.''

Sprint rose 65 cents, or 7.1 percent, to the equivalent of $9.84 at 9:52 a.m. in Germany from the close of $9.19 in regular New York Stock Exchange trading yesterday. The Overland Park, Kansas-based company's stock gained in extended trading yesterday after the agreement was reported by the Wall Street Journal.

Clearwire gained 14 percent in extended trading after closing at $16.46 on the Nasdaq Stock Market.

Big-League Help

Intel spokeswoman Kari Aakre, Comcast spokesman John Demming, Time Warner Cable spokeswoman Maureen Huff and Google spokesman Jon Murchinson declined to comment. Sprint's Leigh Horner and Clearwire's Susan Johnston didn't return messages.

Sprint enlisted big technology companies such as Google and Intel 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. The company lost more than 1 million mobile-phone contract customers in 2007.

``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 wireless-fidelity, or Wi-Fi, systems, which deliver Internet access to smaller areas such as buildings and parks. 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.

Earlier Accord

Clearwire and Sprint had scrapped a WiMax alliance in November after agreeing in July to team up. The new accord may bolster Clearwire, which has yet to turn a profit and posted a $727.5 million net loss last year. Its stock has declined 8.7 percent since Nov. 8, the day before Sprint and Clearwire ended their original agreement.

``This certainly would be a positive development for both Sprint and Clearwire shareholders,'' Nelson said. ``It's a positive for Sprint, but potentially transformational for Clearwire.''

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.

Under the agreement, they can choose which services to offer over the WiMax network, said one of the people familiar with the deal, likening the arrangement to buying wireless minutes on a wholesale basis.

Pitching In

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

An additional $10 million will come from Trilogy Equity Partners, the investment firm co-founded by John Stanton, the former Western Wireless Corp. chief executive officer, the people said. Stanton and Bright House Networks spokeswoman Jennifer Mooney didn't immediately return phone messages.

Arvind Sodhani, president of Intel's investment arm, initiated talks on the new agreement after the previous deal between Sprint and Clearwire failed, one of the people said. Sodhani was a board member at Kirkland, Washington-based Clearwire from August 2006 until last December.

Intel's WiMax Push

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.

The company uses its Intel Capital investment arm to spur the growth of technologies that will benefit sales of its microprocessors. The investment unit spent $639 million on 166 deals last year.

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 04:29 EDT