By Yinka Adegoke and Sinead Carew
NEW YORK (Reuters) - Sprint Nextel Corp <S.N> has held talks with cable partners about supporting their loss-making Clearwire Corp <CLWR.O> wireless venture in the face of increasing competition from bigger rivals, according to two people familiar with the matter.
The shares of Clearwire, which is currently looking for about $900 million in funding, rose 30 percent after Bloomberg reported cable operators with a minority stake in Clearwire were in talks with Sprint -- Clearwire's majority owner and its biggest customer.
But sources told Reuters any decisions about measures such as new funding would depend on the outcome of AT&T Inc's <T.N> efforts to create a much bigger rival by buying T-Mobile USA, according two people who spoke to Reuters on condition they would not be named because the talks were private.
"It's clear that something will have to be done eventually, but nothing is imminent," said one of the people, who stressed the AT&T deal would be the catalyst rather than Clearwire's financial or operating struggles.
The other person described the chances of a Clearwire investment deal anytime soon as a "low probability."
While the AT&T/T-Mobile USA deal could be approved by the end of the first quarter of next year, it is likely Sprint will want to get the Clearwire situation resolved before October 7, when it is due to announce a major network upgrade.
All the cable partners in the Clearwire venture -- Comcast Corp <CMCSA.O>, Time Warner Cable Inc <TWC.N> and Bright House Networks LLC -- were involved in the talks, according to the people. Clearwire, Sprint and the cable companies declined comment for the story.
Sprint, the No. 3 U.S. mobile service has been speaking out against AT&T's $39 billion plan to buy T-Mobile USA, a Deutsche Telekom AG <DTEGn.DE> unit, and has urged regulators to stop the deal because it would hurt competition.
Bloomberg, also citing unnamed sources, reported Cox Communications Inc <COXC.UL> and Cablevision Systems Corp <CVC.N> also participated in the talks, which it said involve various scenarios, including a Clearwire buyout or an investment in the company through Sprint.
Clearwire announced earlier this month it was looking for funding to help upgrade its network with Long Term Evolution (LTE) -- an emerging high-speed technology.
Clearwire shares rose 70 cents, or 30 percent, to about $3 on Nasdaq in afternoon trading, while the shares of Overland Park, Kansas-based Sprint were up 3 cents, or almost 1 percent, to $3.52 on New York Stock Exchange.
(Reporting by Yinka Adegoke and Sinead Carew in New York, and Soham Chatterjee in Bangalore; editing by David Cowell and Andre Grenon)