About a month ago, a rumor surfaced that Intel (NSDQ: INTC) was going to invest $2 billion into a soon-to-be-announced joint venture between Sprint (NYSE: S) Nextel and Clearwire (NSDQ: CLWR). It seemed unlikely then, and a report released today confirms that the scenario was way off the mark.
The rumor first popped up in TheStreet, which attributed the news to people close to the deal. It also claimed the investment would close in a few days. More recently, Sprint and Clearwire have confirmed they are still talking about a partnership of some kind and that they could be close to making an announcement. But today, a report released by a JP Morgan analyst, who attended an Intel event last week, said the an investment of that magnitude by Intel is unlikely. “There is very little precedent for Intel making a US$1bn-US$2bn investment in a non-core business,” according to telecoms.com. Analyst Jonathan Chaplin continued that an investment of that size would equal Intel’s entire R&D budget for new initiatives and “WiMax is only one of several new initiatives.”
Although the figure was way off, Chaplin does believe Intel is still interested in making an investment in a Sprint/Clearwire venture, but it would be more likely alongside a consortium of other players like Google (NSDQ: GOOG), handset manufacturers and wireline or cable operators. The WSJ reported in January that Clearwire and Sprint were in talks with Intel, Best Buy, Google or even a foreign telecom company, to help fund the nationwide build-out of the WiMax network.