CLWR Soars 30%: Sprint Affirms Up To $1.6B In Payments, Investment

Shares of wireless broadband provider Clearwire (CLWR) are up 54 cents, or 30%, at $2.32, after the company this morning announced a new network sharing arrangement with Sprint-Nextel (S), and made the deadline for interest payment on its debt, confirming a story reported yesterday by Reuters’s Sinead Carew.

Sprint stock is down 3 cents, or 1%, at $2.67.

Sprint will pay Clearwire $926 million to continue using Clearwire’s “WiMax” wireless network services through 2013, and Sprint will continue to use the network through at least 2015, the companies said.

Total payments and investments from Sprint are “potentially worth up to $1.6 billion over the next four years,” Clearwire said.

Sprint CEO Dan Hesse said in the statement the deal brings Sprint better pricing and will afford the company additional capacity for the “Long Term Evolution” version of 4G cellular service.

Sprint also committed to taking as much as $347 million in Clearwire stock should the company decide to raise equity of $400 million to $700 million, it said.

Clearwire’s jump this morning was primed by the chatter in recent weeks over whether or not Clearwire would make the coupon payment, and over whether it would reach a deal with Sprint to avert any possible restructuring of Clearwire down the road. The shares had already jumped nearly 20% yesterday afternoon as Carew�first broke the news a deal was in the works.

Update: Responses from the Street are trickling in. The deal is a “Clear positive for Clearwire,” writes William Power with R.W. Baird, who has a Neutral rating on Sprint, as it “improves visibility.” He thinks “future potential equity investments from Sprint should help, though it will likely still need contributions from others.”

And Jennifer Fritzsche with Wells Fargo, who has an Outperform rating on both Clearwire and on Sprint shares, thinks things have worked out exactly as they should have:

This announcement is consistent with our long�term thesis that Clearwire is the best long�term solution to Sprint’s spectrum needs. We believe this agreement provides Clearwire the necessary support from Sprint that it needs to raise the capital for its LTE buildout.

However, she also writes that Clearwire negotiated from a “weak position,” and that the price concessions that Sprint has wrung from the company will be key to “understanding the long-term value” in the deal as far as what Clearwire gets.