Clearwire works out a new network deal with Sprint Nextel

In a strategic move that will resolve a long-drawn-out scuffle which had threatened to push Clearwire into bankruptcy court, the money-losing high-speed wireless provider has worked out a new network deal with its majority owner as well as biggest customer, Sprint Nextel.

Along with resolving one of the most complex entanglements in the US wireless industry - marking a dispute of sorts between Sprint which depends on the Clearwire network for high-speed wireless service, and Clearwire which relies on Sprint for funds -, the deal has also put to rest the concerns that Clearwire was facing a liquidity crisis, when it decided to preserve cash by missing out interest-rate payments last month.

Bringing to an end Sprint and Clearwire's two-year-long infighting over financial commitments, service deals, and business strategies, the new network deal will have Sprint making a payment of $1.6 billion to Clearwire during the next four-year period. In addition, Sprint has also consented to an agreement whereby it will mull over the chances of a future equity infusion.

With Sprint and Clearwire also to extend a deal under wholesale WiMax wireless capacity is purchased by Sprint from Clearwire and the 4G services are resold to its own customers, Clearwire CEO Erik Prusche said that the new developments "cement" the Sprint-Clearwire relationship.

Noting the new network deal is "a significantly positive development for Clearwire," Michael Nelson - analyst at New York-based Mizuho Securities USA - said: "One could argue whether it spared them from bankruptcy, but it certainly extended the runway."