Clearwire and Sprint Nextel will combine their wireless broadband units to create a $14.55 billion communications company.
The new company, to be named Clearwire, will receive a $3.2 billion investment from Intel, Google, Comcast, Time Warner Cable and Bright House Networks.
The investment is based on a target price of $20 per Clearwire share and will give the companies a 22 percent stake in the new venture.
Overland Park, Kan.-based Sprint Nextel will be majority owner with a 51 percent equity stake, while existing Clearwire shareholders will receive about 27 percent interest.
Clearwire , which will concentrate on rolling out a mobile network based on the emerging WiMAX standard, will also receive an investment from Trilogy Equity Partners, led by U.S. wireless industry veteran John Stanton.
WiMAX promises faster download speeds than the latest networks run by cell-phone operators, and it's even seen as a potential competitor to fixed-line broadband.
Rivals such as AT&T and Verizon Wireless have eschewed WiMax, opting instead for upgrades to their current wireless broadband networks and a future technology called Long Term Evolution.
Clearwire already provides wireless Internet service in some parts of the country, using a WiMax-like technology.
The company had a subscriber base of nearly 400,000 wireless broadband customers at the end of 2007.
The new company is looking for a U.S. network deployment between 120 million and 140 million people by the end of 2010.
Sprint and Clearwire, a startup founded by cellular pioneer Craig McCaw, had already announced their plans to build out networks using WiMAX technology, but had been looking for outside funding.
The new company will be led by Clearwire Chief Executive Benjamin Wolff, with Sprint Chief Technology Officer Barry West serving as president. West also leads Sprint's XOHM division.
The Kirkland, Wash.-based venture will house workers from Clearwire and Sprint's XOHM unit and will have research and development and other operations located in Herndon, Va.
Its board will consist of 13 members at the start. Sprint will name seven of them, which will include at least one independent director. The investor group will name four members, including one independent.
Eagle River, a private investment company controlled by wireless veteran Craig McCaw, will name one member, with the remaining independent member selected by Clearwire's nominating committee. McCaw is expected to serve as non-executive chairman.
Other anticipated board members include Sprint President and CEO Dan Hesse, Comcast Chairman and CEO Brian Roberts, Time Warner Cable President and CEO Glen Britt and Stanton.
The deal, which has been approved by the boards of all companies involved, is expected to close during the fourth quarter.
The company will apply for a Nasdaq listing under the ticker "CLWR." Clearwire shares jumped 7.4 percent, or $1.22, to $17.68 at the open of trade.
Sprint shares rose 4.5 percent, or 41 cents, to $9.60.