Clearwire to raise more than $1.5 billion

NEW YORK (Reuters) - Clearwire Corp (CLWR.O) said on Tuesday that it would raise $1.564 billion from its current investors including $1.176 billion from Sprint Nextel (S.N) to help fund a high-speed wireless network it is building.

Along with Sprint and its cable partners, Clearwire, founded by wireless pioneer Craig McCaw, is competing with the dominant U.S. mobile providers Verizon Wireless and AT&T Inc (T.N) in the race to sign up consumers to lucrative services such as mobile Web surfing.

Sprint the No. 3 U.S. mobile service and Clearwire's 51 percent owner has been struggling to stem customers losses from its own network, but it is banking on Clearwire's network for its next generation of wireless data offerings.

Cable operators Comcast Corp (CMCSA.O) and Time Warner Cable (TWC.N) will invest $196 million and $103 million respectively. These companies rent space on Clearwire's network to offer high-speed wireless services. Chip maker Intel Corp's (INTC.O) contribution to Clearwire will be $50 million.

Soleil/Nelson Alpha Research analyst Michael Nelson said the funding was good news for Clearwire but noted that it was less than half of a total $3.4 billion in funding that he estimates the company will need by 2013.

Nelson said in a research note that he has "significant concerns regarding Clearwire's business model and cash burn in the face of a weak macro environment."

Clearwire said it would get about $1.057 billion in cash from equity financing within five business days and $440 million by year-end, with the remaining $66 million to be funded during the first quarter of 2010.

Clearwire also said it would launch an offer of a minimum of $1.45 billion in senior secured notes and to use net proceeds to pay off its existing $1.40 billion credit facility.

In the latest funding round, Craig McCaw's investment firm Eagle River Holdings will also give Clearwire $20 million in new funding and Bright House Networks will contribute $19 million. All the participants will get newly issued shares priced at $7.33 per share in exchange for their investments.

Clearwire shares were up 9 cents, or 1.3 percent, to $6.89 on Nasdaq in early afternoon trading,, while Sprint shares fell 13 cents, or 3.8 percent, to $3.30 after closing up 20 percent the day before on New York Stock Exchange.

Clearwire option volume was four times the average daily turnover with investors showing interest in November, March and June call options at the $7.50 strike by midday.

Investors are buying these calls in anticipation that the stock might move beyond $7.50, said Frederic Ruffy, options strategist at WhatsTrading.com.

Verizon Wireless is owned by Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L).

(Reporting by Sinead Carew in New York and Doris Frankel in

Chicago; Editing by Lisa Von Ahn and Tim Dobbyn)