An Odd Move For Sprint (S)

Sprint’s (S) plan to get back to the vanguard of cell service and take business from AT&T Wireless (T) and Verizon Wireless is based on its huge national WiMax network. It is scheduled to be completed by the end of 2008 and will cover an area that could serve 100 million people.

WiMax is an alternative to other 3G wireless broadband solutions, and Sprint believes that the service will be more attractive than 3G by offering faster speeds.

Odd then, that Sprint said it was seeking new ways to finance its WiMax build-out. The company has never indicated that the $3 billion cost would be a problem and its has well-heeled parters in the enterprise including Intel (INTC) and Motorola (MOT), both champions of the WiMax cause.

But, Sprint is talking about spinning out its WiMax business and perhaps joining up with WiMax IPO Clearwire (CLWR), which is itself under-financed in the view of many Wall St. analysts. Clearwire may need up to $5 billion to build its national network, and it has nowhere near that much money in the bank.

According to The Wall Street Journal, Sprint might team with Clearwire to eliminate a competitor. One theory is that the companies could go to the cable industry, a natural nemesis to Sprint’s foes at AT&T and Verizon, for financing the infrastructure build.

But, cable should also see WiMax as a competitor. Good wireless broadband must, to some extent, compete with cable broadband offerings.

Sprint may not want to risk its balance sheet. But it should. Getting into business with Clearwire or cable companies is, to a large extent, sleeping with the enemy. Sprint has enough problems. It does not need to compound them

Douglas A. McIntyre can be reached at 24/7 Wall St. He does now own securities in companies that he writes about.