Sprint raising debt, may fund ailing Clearwire

Sprint (s s) may be poised to rescue 4G wholesale partner Clearwire (s clwr). The third-place carrier said Friday it was planning to offer debt in the form of 7- and 10-year notes that it will use for general purposes including potentially funding 4G provider Clearwire.

If it follows through, Sprint could potentially bridge much of Clearwire’s funding needs. Clearwire said this week it needs $1 billion to continue operations and launch an LTE network. Sprint has not said how much it is raising through the notes, which are due in 2018 and 2021, and there’s no firm promise that it will use the money toward Clearwire. But the news nonetheless provided a boost to Clearwire, which saw its stock rise more than 20 percent Friday following the announcement.

The news is another sign that Sprint may be moving closer to Clearwire, which it owns a majority stake in. This is in contrast to an Oct. 7 strategy update meeting in which Sprint laid out its plans for an LTE network but refrained from saying much about Clearwire’s involvement in the plan. Sprint said it would stop selling WiMAX devices that run on Clearwire’s network after the end of 2012. And Sprint executives even acknowledged that it has suffered from its relationship with Clearwire because it can’t exert control over the wholesaler despite its majority stake. That meeting sent Clearwire’s shares tumbling.

But Sprint has since clarified its ongoing relationship with Clearwire, saying on its latest quarterly earnings call that it was cooperating with Clearwire to ensure that the two companies’ LTE networks will be able to work together. The companies are still working on a commercial agreement that would allow Sprint to utilize Clearwire’s LTE network. That would certainly boost Clearwire’s fortunes, but its funding needs remain. If Sprint can pitch in, it would help ensure that Clearwire would be in a position to help Sprint with its long-term vision of building a larger 4G LTE network that blends spectrum from Sprint, LightSquared and potentially Clearwire.

Sprint needs more help with its 4G plans. It said it has enough spectrum to get to 2014 and then will turn to LightSquared to get it through 2015, provided LightSquared gets FCC approval. But after that, it will need additional spectrum. Clearwire would be a logical choice and despite the strained relationship between them, it sounds like the two may be realizing just how much they need each other.