Clearwire shares jump on Softbank-Sprint deal

NEW YORK -- Shares of Clearwire Corp., which operates a wireless data network, hit a 52-week high after Japan's Softbank Corp. agreed to pay $20.1 billion for a 70 percent stake in Sprint Nextel Corp.

THE SPARK: Sprint owns 48 percent of Clearwire but doesn't control its board. It's also Clearwire's biggest customer, reselling access to its network as "Sprint 4G." Bellevue, Wash.-based Clearwire is in dire need of more funding to modernize its network. Sprint has had its own financial constraints, and hasn't been willing to invest more in Clearwire, but that could change now that it has Softbank's deep pockets behind it.

However, the deal between Softbank and Sprint didn't contain any provisions regarding Clearwire.

THE ANALYSIS: Chris Nicoll and Steve Hilton at Analysys Mason said they believe the next step for Softbank is to buy the rest of Clearwire and speed up its network revamp.

"Funding has been a problem for Clearwire and this is a perfect fit for Softbank's larger corporate strategy," the analysts wrote.

For the same reason Kevin Smithen at Macquarie Capital upgraded Clearwire to "Neutral" from "Underperform" on Monday. He put a $2.75 price target on the shares.

SHARE ACTION: Clearwire shares rose 25 cents, or 10.8 percent, to $2.57 in afternoon trading. The day's high of $2.96 was the highest level since Sept. 2011. The shares have doubled in value since Wednesday's close, as news of talks between Softbank and Sprint leaked out.