U.S. wireless carrier Sprint Nextel has reached a deal with WiMAX Clearwire for the next four years. According the agreement, Sprint Nextel, the third largest mobile operator in the United States, agreed to pay up to $1.6 billion to Clearwire over the next four years, including a pact on networks and a potential capital injection, softening fears about a liquidity crisis at Clearwire.

Clearwire is seeking nearly $1 billion financing to maintain the normal operations of the company. Shares of Clearwire, which are subject to investor concerns over bankruptcy, were up 18 percent after the company said on Thursday that they can make a payment of interest on debt of $237 million.

Clearwire, which has most of its shares held by Sprint, said last month that the company could not pay the interest to conserve capital, since it needs almost $1 billion in new funding to keep operating and finance on improvement of its network.

“We should take comfort that not only have we identified additional funding, we’ve extended the relationship with Sprint, we’ve got a commitment to LTE [Long Term Evolution standard],” Clearwire Chief Executive Erik Prusch said. “This is an important piece in the mix of capital we need. The piece was critical.”

As part of a plan to raise funds, Clearwire is considering selling the wireless spectrum for loans to buy equipment and other programs from equipment manufacturers. Clearwire majority stake is owned by Sprint but doesn’t control it. An earlier 2008 agreement between these two companies saw Sprint supply much of its expensive radio program spectrum rights to Clearwire in exchange for an equity stake. Sprint will use Clearwire WiMax technology on building new network and expected to start the joint operation by 2013.

“We just forged a whole new relationship with these guys,” Sprint Chief Financial Officer Joe Euteneuer said at an investor conference Thursday.

Industry experts are optimistics about the new life provided to Clearwire. “This magnitude of bad behavior between two companies is very uncharacteristic of the industry, or probably any industry,” said Credit Suisse analyst Jonathan Chaplin.

“This is a significantly positive development for Clearwire,” said Michael Nelson, a Mizuho Securities USA Inc. analyst in New York. “One could argue whether it spared them from bankruptcy, but it certainly extended the runway. Without this deal, there would have been increased challenges for them to raise additional funding.”

Sprint will be introducing next generation of LTE advanced spectrum 4G network in next couple of years. The company is planning to roll out LTE on its existing 1.9 GHz spectrum to cover WiMAX footprint to 120 million people. The new agreement will have both Sprint and Clearwire to work together to collaborate on LTE network. But Sprint will be facing several challenges in integrating various network technologies.