(Bloomberg) — Sprint Nextel Corp. is talking with cable companies about a possible investment that may lead to an acquisition of partner Clearwire Corp., according to three people familiar with the talks.
Sprint, the third-largest U.S. wireless operator, is discussing the investment with companies including Comcast Corp., said the people, who wouldn’t be identified because the talks aren’t public. Under one scenario being discussed, Sprint would use the money to buy the equity in Clearwire it doesn’t own. Talks are preliminary and no deal is imminent, they said.
Sprint and Comcast, which are already investors in Clearwire along with Time Warner Cable Inc. and Bright House Networks LLC, are discussing ways to provide funding to the money-losing Kirkland, Washington-based company so it can build out its high-speed wireless network. Clearwire plans to spend about $600 million to upgrade its network to so-called long-term evolution, or LTE, technology, to compete against AT&T Inc. and Verizon Wireless, the company said this month.
The size and timing of the investment in Sprint haven’t yet been determined, the people said. The discussions involve various scenarios, including a Clearwire buyout or an investment in the company through Sprint, the people said. Cox Communications Inc. and Cablevision Systems Corp. have also been in discussions with Sprint, two of the people said.
A deal with Sprint may help cable companies compete more effectively against telephone rivals in offering high-speed wireless service. AT&T and Verizon Communications Inc. can offer a so-called quadruple play of landline, wireless, Internet and pay-television service to customers in some regions.
Cable-company backing would also bolster Sprint as it struggles to compete against its larger rivals. The company, which in July reported its 15th consecutive quarterly loss, will lose ground to AT&T if that company completes its proposed acquisition of T-Mobile USA. The deal would allow AT&T to surpass Verizon Wireless as the country’s largest wireless operator.
Bill White, a spokesman for Sprint, said the company doesn’t comment on rumors or speculation.
Susan Johnston, a spokeswoman for Clearwire; Charlie Douglas, a Comcast spokesman; Alex Dudley, a Time Warner Cable spokesman; Todd Smith, a spokesman for Cox; and Jim Maiella, a spokesman for Cablevision, all declined to comment.
Lorelie Johnson, a spokeswoman for Bright House, wasn’t immediately available for comment.
Sprint, based in Overland Park, Kansas, fell 23 cents, or 6.2 percent, to $3.49 at 4 p.m. in New York Stock Exchange trading, and has dropped 17 percent this year. Clearwire’s shares fell 2 cents to $2.31 on the Nasdaq Stock Market. The stock has dropped 55 percent this year.