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Sprint Nextel Corp. (S - Analyst Report), one of the leading wireless providers in the U.S., is in talks to buy a 49% stake in Clearwire Corporation . Presently, Sprint is the biggest shareholder in Clearwire, owning a 50.8% share. It is reportedly negotiating with the minority shareholders for a complete takeover. 

While there is no official confirmation, markets are buzzing with rumors of a $3 per share deal for the complete acquisition of Clearwire. In October, Sprint already brought under its possession the 4.5% share that Eagle River Holdings LLC held in Clearwire.

Clearwire, which specializes in mobile and fixed wireless broadband communications, has been providing 4G network services to Sprint. Now that Sprint is keen on building its own 4G network, it also aims at upgrading the Clearwire technology to set a compatible technological platform.    

If the deal materializes, gaining full rights over Clearwire would imply access to its radio frequency spectrum ranging 2.5 GHz, utilized in providing services using 4G 802.16e mobile WiMAX standard.

Besides this deal, Sprint is also trying to forge a partnership with DISH Network Corp. (DISH - Analyst Report) that will enable the latter to offer its own mobile services using Sprint’s network. DISH, the second largest satellite TV operator, is waiting for the FCC nod to launch a nationwide high-speed wireless broadband network. This will enable the company to offer mobile Internet, voice and video services to its customers using its newly acquired satellite airwaves from the bankrupt DBSD North America Inc. and TerreStar Networks Inc.

The agreement, if cleared, would allow Sprint to access DISH Network’s spectrum, which is the most important and scarce element in deploying a nationwide super-fast LTE network. Nevertheless, this deal may need an approval from the Japanese wireless service provider Softbank, which has decided to purchase a majority stake in Sprint.

In October, it was reported that Sprint is selling its 70% stake to Japanese cellphone company Softbank Corp. for $20.1 billion. Sprint is in the midst of a multi-billion dollar restructuring program known as Network Vision.

Through this plan, the company is concentrating on the core Sprint platform, which includes CDMA, WiMAX and Long-Term Evolution (LTE) technologies, and eventual termination of the Nextel platform (iDEN business). Though the company has enough liquidity to address the growing costs of network upgrade, iPhone subsidies, debt maturities and working capital requirements, it needs to bolster its liquidity position for certain buyouts. The potential transaction would provide Sprint the financial support to build and improve its competitive wireless network.

However, the company is also struggling to deal with the loss of post-paid customers to other industry players such as Verizon Communications Inc. (VZ - Analyst Report) and AT&T (T - Analyst Report). This shrink in subscriber base was primarily due to intense price competition, ineffective marketing, less favorable network quality and delay in integration of back-office functions with its acquired units.

We reaffirm our long-term Neutral recommendation on Sprint. Currently, the stock has a Zacks #2 Rank implying a short-term (1-3 months) Buy rating.

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