Thursday is D-Day for Clearwire (and Sprint)

Clearwire (s clwr) has to decide if it will make a $237 million interest payment on Thursday, and the decision will have implications that could rock the tumultuous mobile industry. If it makes the payment, it will eat into cash it desperately needs to build out an LTE network and keep afloat, but if it defaults, it threatens Sprint (s s): its largest benefactor. Analysts are torn on the topic, with most thinking Clearwire may hedge and take a 30-day grace period while it scrambles for cash.

As far back as February 2010, we warned that Clearwire needed to rush to build out capacity and add customers because it had almost $2 billion in debt payments coming up in 2011: debt payments that could take it down if its cash flows didn’t solidify. But instead of building up its customer base, Clearwire has shifted strategies from a retail model to a wholesale one and is now planning to spend capital upgrading its network. Essentially, Clearwire’s big bet on WiMAX has failed, and it’s doing its best to salvage its business.

The question is if Sprint will rush in to play savior to Clearwire with more money. Sprint has raised some $4 billion in debt, which might go toward the Clearwire cause, but it has been incredibly focused in the last few months on halting the merger of AT&T (s t) and T-Mobile, as well as implementing its own network modernization plan. Can Sprint now turn back to its Clearwire problem? Abandoning Clearwire would leave Sprint with a weak spectrum position as it attempts to roll out a 4G network. So Thursday, all eyes will turn to Clearwire to see if it and Sprint will make it through the holiday season to fight for another year.

Image courtesy of Flickr user katerha.