The new company, which will retain Clearwire's name, will continue developing a mobile network based on WiMax technology, which promises faster speeds than the latest cellular networks for movies, games and other data services.
A group of outside investors, including Intel, Google, Comcast, Time Warner Cable and Bright House Networks, will kick in $3.2 billion for the new company. The investment is based on a target price of $20 per Clearwire share and will give the companies a 22 percent stake in the new venture.
Clearwire, a Kirkland, Wash.-based startup founded by cellular pioneer Craig McCaw, also will receive an investment from Trilogy Equity Partners, led by U.S. wireless industry veteran John Stanton.
Overland Park, Kan.-based Sprint Nextel will be majority owner with a 51 percent equity stake, while existing Clearwire shareholders will receive about 27 percent interest.
The new company is looking for a U.S. network deployment reaching 120 million to 140 million people by the end of 2010.
Company officials said they'll need up to $2.3 billion more in funding by getting additional investors or borrowing.
They also could simply shrink the size of the network.
Both companies have separately pursued rolling out WiMax networks. They characterized their joint venture as a way to speed along development and adoption of the technology, which could eventually compete with fixed-line broadband.
''The agreement enables us to get to market faster and reach a broader audience than we could have if we went alone,'' Dan Hesse, Sprint Nextel's chief executive officer, told analysts during a conference call Wednesday.
Rivals such as AT&T and Verizon Wireless have eschewed WiMax, opting instead for upgrades to their current wireless broadband networks and a future technology called Long Term Evolution, or LTE.
But Hesse said WiMax is available now and should give the new company a two-year head start in the so-called fourth-generation, or 4G, telecommunications market.
Clearwire will sell WiMax services back to Sprint and the cable partners, through a ''mobile virtual network operator,'' or MVNO, business model. There are no plans, however, to offer similar access to service providers not part of the joint venture.
The cable companies and Clearwire also will receive current-generation wireless service, called 3G, from Sprint Nextel through a separate agreement.
For Sprint, the deal gets an operational monkey off its back and allows management to return to salvaging its troubled wireless business, which has steadily lost subscribers. It also could quiet critics who consider WiMax experimental and expensive -- one estimate had Sprint paying more than $5 billion to roll out the service.
Clearwire gets new capital, infrastructure and broadband spectrum, as well as further validation of its technology.
''We strongly believe that the new Clearwire will be in the best position to succeed in the 4G race,'' said Clearwire Chief Executive Benjamin Wolff, who will lead the new company.
Intel will be able to sell WiMax-enabled computer chips for handsets and laptops and eventually develop chips for a wide range of consumer products, including handheld cameras. Google will provide local and Web search functions and help develop future software applications.
