DT, Sprint talk broadband stake

Deutsche Telekom is in early talks with Sprint Nextel about funding its next-generation Web service Clearwire — not about buying all of Sprint, said a source with direct knowledge of the process.

Late last year, Sprint bought 51 percent of Clearwire, which offers consumers wireless broadband access at home and on the road.

Sprint Chief Executive Dan Hesse last week told investors the company was willing to sell a minority portion of Clearwire for $2 billion in funding. He also said Sprint wanted to maintain its majority ownership.

But with $21 billion in debt and falling earnings, Sprint may need outside money to finance Clearwire’s roll-out plan. Clearwire currently covers 10 million people with its 4G Wimax service; it plans to reach 30 million customers by year’s end, and 120 million in 2010.

A second source close to the situation said he believed that discussions between DT and Sprint have already ended without a deal.

However, Sprint is stuck between better-funded AT&T and Verizon, and lower-end operators like Leap Wireless that offer less-expensive pre-paid service, the source said.

Speculating that the recent reports about DT pursuing Sprint could have been intended to pressure the telecommunications company, he said that DT might be able to acquire struggling Sprint or its assets in the long run.

Clearwire CEO Bill Morrow last month in an earnings call said he was increasingly encouraged about the prospects for securing the necessary funding — on terms it found acceptable.

Other Clearwire investors that could provide funding include Intel, which has already sunk $1.2 billion into it through several rounds; and Time Warner, who may offer Clearwire to New York customers

Deutsche Telekom, which operates T-Mobile, is interested in Clearwire because it needs more US spectrum, another source said.