Sprint's investment designed to scare off Clearwire suitors

Sprint Nextel may not yet have Clearwire in the palm of its hand, but its decision to buy Eagle River Holdings' stake might buy Sprint some time by scaring off any other companies pondering a Clearwire takeover.

Sprint would be unable to block a spectrum sale by Clearwire to AT&T, Dish Network or anyone else that might be interested. Dish may be the company Sprint most fears getting its hands on Clearwire. Charlie Ergen, Dish's founder and chairman, is rumored to already hold in excess of $900 million of Clearwire's debt, according to Tim Farrar, head of Telecom, Media and Finance Associates. Sprint previously had majority control of Clearwire but reduced its voting interest below 50 percent during June 2011 in order to eliminate potential cross default risk. Sprint could choose a similar route to reduce only its voting interest if Clearwire struggles more financially, say analysts who expect Sprint to surrender Clearwire shares to take their stake back under 50 percent if they are unable to take control or materially fund Clearwire before the closing of the Softbank transaction.