Ahead of the Bell: Sprint Nextel-Clearwire joint venture

NEW YORK—Sprint Nextel Corp.'s stake in a joint venture with Clearwire Corp. will likely be worth $2 to $3 per share and significantly reduce capital expenditures, an analyst said Wednesday.

Cowen & Co. Thomas Watts said the combination of Sprint Nextel's wireless broadband unit with Clearwire may cut his capital expenditure projections by $2.2 billion.

The new company -- to be named Clearwire -- will work to develop a WiMAX network. WiMAX is similar to the Wi-Fi technology used to provide Internet service in airports and coffee shops, but it can cover much larger areas.

Sprint Nextel will own a 51 percent stake in the new Clearwire, and Intel Corp., Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks plan to invest $3.2 billion for a 22 percent piece.

The remaining 27 percent stake will go to existing Clearwire shareholders.

"Due to the structure, Sprint should not have to consolidate losses from the venture, even if it has a majority stake," Watts said in a note to clients.

The participation of cable companies -- and their combined 40 million basic subscribers -- would push the new company's market value even higher, he said.

Watts currently rates shares "Outperform."

Shares of Clearwire rose $2.43, or 14.8 percent, to $18.89 in premarket trading, while shares of Sprint Nextel rose 51 cents, or 5.6 percent, to $9.70.

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