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More Woes for Sprint and Clearwire

Dan Radovsky
October 18, 2011

English majors, rejoice: I have only a few more cliches left to describe the dire economic straits that both Sprint Nextel (NYSE: S  ) and Clearwire (Nasdaq: CLWR  ) constantly find themselves trying to escape. Unfortunately, though, I'll have to throw one more hackneyed phrase into their saga: "piling on."

That's what it may seem the credit ratings agencies are doing to both companies. As if they didn't have enough woes, Sprint and Clearwire will each have an even deeper ratings hole to climb out of if they want to survive.

The junk bond man cometh
Moody's Investors Service, a division of Moody's (NYSE: MCO  ) , downgraded Sprint well below investment grade, from Ba3 ("Speculative Grade: ¬†Questionable") to B1 ("Speculative Grade: ¬†Poor"). This came about, in part, because of Moody's displeasure that Sprint isn't working with Clearwire to produce an upgraded 4G network together. By going it alone, Moody's indicated, Sprint will need between $6 billion and $8 billion by 2013 to build its own 4G network and pay off its debt as it matures.

Sprint blew it by not reaching a "win-win arrangement with Clearwire," according to Moody's.

As for Clearwire, Moody's downgraded it one notch t