OVERLAND PARK, KAN. (AP) - Sprint Nextel Corp. has agreed to pay wireless broadband provider Clearwire Corp. more than $1 billion through 2012 for wireless wholesale services, settling a dispute that has cut into its revenue.
Sprint, which owns most of Clearwire, is also its largest customer. Sprint CEO Dan Hesse said the company is pleased to have reached a deal.
Sprint has agreed to pay $300 million in 2011 and $550 million in 2012. It also agreed to pre-pay $175 million for its high-speed, “4G” telecommunications services it plans to use this year and beyond. In addition, Sprint will pay Clearwire $28 million to settle a pricing dispute.
Nomura Equity Research analyst Mike McCormack said the new deal “maintains the status quo” between the companies.
“For Sprint, we view the agreement as a small positive, in that it allows the company some breathing room to continue discussions with LightSquared, while maintaining a 4G presence through Clearwire,” the analyst wrote in a note to investors. Funded by a private equity firm, LightSquared plans to build an independent wireless network.
Clearwire had been locked in a dispute with Sprint over how much Sprint should pay for data service for phones that run on both 4G and the older 3G networks. The companies entered arbitration in November.
McCormack said the deal could also lessen investor worries that Sprint might buy Clearwire soon.
“The focus will now likely shift to network sharing, and the potential benefits of those relationships,” he wrote, adding that he’s “quite skeptical” that such network-sharing arrangements will meaningfully benefit Sprint.
Sprint shares rose 9 cents to $4.79 in midday trading. Shares of Clearwire fell 20 cents, or 3.5 percent, to $5.58.
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