Sprint, Clearwire Finally Reach Deal

Sprint Nextel (S - Cramer's Take - Stockpickr) and Clearwire (CLWR - Cramer's Take - Stockpickr) have finally reached a deal that will combine their wireless broadband businesses in a new communications company.

The new company, which will be named Clearwire, will deploy the first nationwide mobile WiMax network, considered a fourth-generation wireless technology that features fast data transfers over long distances.

Sprint and Clearwire said they have received $3.2 billion in investments for the joint venture from Intel (INTC - Cramer's Take - Stockpickr), Google (GOOG - Cramer's Take - Stockpickr), Comcast (CMCSA - Cramer's Take - Stockpickr), Time Warner Cable (TWC - Cramer's Take - Stockpickr) and Bright House Networks.

The investment will be based on a target price of $20 for each of Clearwire's common shares. Sprint will hold the largest stake in the new company, owning approximately 51% of the equity. Existing Clearwire shareholders will own about 27%, and the investor group will be acquiring roughly 22%.

"For Sprint shareholders, this is an opportunity to unlock and bring visibility to the value of our significant spectrum assets, technology and expertise, by leveraging the technology, applications and distribution strengths of our investors, who together command nearly a half-trillion dollars in market capitalization," said Sprint CEO Dan Hesse.

Stifel Nicolaus analyst Christopher King says he remains somewhat skeptical regarding the long-term viability of WiMax to compete with newer so-called 4G networking platforms, including LTE, but the cash infusion from the group of investors should improve the chance for success.

"We believe the $3.2 billion in outside funding will allow Clearwire and Sprint Nextel to make significant strides in building out their WiMax network to allow WiMax an important first-mover advantage in the wireless broadband world," King wrote in a research note.