Sprint said to be back in talks with Clearwire

Sprint Nextel and Clearwire are back in talks about a possible WiMax joint venture after a previous attempt to work together fell apart last year, the Wall Street Journal reported on Tuesday, citing unnamed sources.

Sprint's continued downhill slide, spurred by defecting Nextel customers, means the deal would make even more sense now, Nadine Manjaro, a senior analyst with ABI Research, told IDG News Service.

"They've lost so much from iDEN defections, they don't really have the money to invest in WiMax," she said. IDEN (Integrated Digital Enhanced Network) is the push to talk technology used in Nextel's network, which Sprint bought in 2005 and continues to struggle to digest.

Clearwire and Sprint, which own the bulk of 2.5GHz spectrum in the country, said in July last year that they planned to jointly build a nationwide WiMax network. But in November the companies said they had failed to reach a final agreement, and terminated their letter of intent.

Since then, Sprint hasn't managed to improve its fortunes. The third-largest operator in the U.S., Sprint's subscriber base declined by 337,000 in the quarter ending Sept. 30. "Sprint is not doing so well now," Manjaro said.

Rather than building a scaled-down network with the assets it has, Sprint would do better if it partnered with Clearwire and also opened up to outside investors, said Manjaro, who worked for Sprint until last April.

From the beginning, she said, Sprint hoped to attract investors to help build the network. "They realized it would take a lot of money," she said. Attracting other parties has now become more urgent. "They didn't anticipate being in the financial position they are in now," she said.

Ideally, Sprint and Clearwire would create a joint venture that would allow each company to retain a stake in the company but also attract other companies, possibly Intel or Google, to provide needed capital, she said. A combined company would be able to negotiate better deals from vendors, she said.

Clearwire has already built wireless broadband networks in 16 U.S. states. Sprint has launched services in Baltimore, Chicago and Washington, D.C., under the Xohm brand.

Spokespeople from Clearwire and Sprint declined to comment on the possibility of any renewed talks.

The IDG News Service is a Network World affiliate.