UPDATE 1-Sprint increases debt offer to $1.3 bln

*Sprint prices $1.3 bln debt offer

*offer for 8.375 pct senior notes due 2017

NEW YORK Aug 10 (Reuters) - Sprint Nextel Corp (S.N), the No. 3 U.S. mobile provider priced $1.3 billion of new senior notes due to be repaid in 2017, the company said on Monday.

The 8.375 percent senior notes will add to Sprint's current debt load of $20.99 billion.

Sprint increased its offer after announcing earlier in the day that it planned to raise $500 million.

Sprint spokesman James Fisher said the company would use the funds for general corporate purposes but declined further comment on the bigger than expected offer.

Late last month Sprint, which has been working for a few years to stem customer defections, posted a second quarter loss of $384 million on revenue that fell more than 10 percent from the same quarter the year before to $8.1 billion.

On July 28 Sprint said it agreed to buy Virgin Mobile USA VM.N in a stock and cash deal valued at $483 million. (Reporting by Sinead Carew; editing by Carol Bishopric)