Sprint to raise $2B in debt, may use to fund Clearwire

Posted 2/27/12

NEW YORK - Sprint Nextel Corp., the third-largest U.S. wireless operator, said it plans to sell $2 billion in notes to help pay for refinancing, network upgrades and possible funding for its wireless partner Clearwire Corp.

Sprint will sell notes in a private placement that will come due in 2017 and 2020, the Overland Park, Kan.-based company said in a statement Feb. 27. Sprint raised $4 billion through a debt offering in November to help with network spending and financing for Clearwire.

The return trip to the capital markets shows Sprint is raising cash to cover the growing costs of upgrading its wireless network to higher-speed technology and selling mobile devices that require subsidies, such as Apple Inc.’s iPhone. Sprint, which has lost money for the last five years, is struggling to compete against larger rivals AT&T Inc. and Verizon Wireless.

The move comes after Sprint’s board voted down a possible acquisition of the smaller MetroPCS Communications Inc., a person familiar with the plan said last week. The board decided the stock and cash transaction, which may have cost as much as $8 billion including debt, would have been too expensive given the current level of Sprint’s stock price.

Sprint closed at $2.47 on Feb. 24 and has dropped 42 percent over the past year, before Monday.

The carrier has a four-year $15.5 billion commitment to pay Apple for the iPhone and in its annual report filed today, Sprint says it has $29.5 billion in additional payment commitments though 2017.

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