Thursday, November 4, 2010

Clearwire Reaches 2.84M Users, Cuts Staff, Updates on LTE 2X Trials

During Q3 2010, Clearwire added 1.23 million total net new subscribers, including 150,000 retail additions and 1.1 million wholesale additions. The company ended the quarter with 2.84 million total subscribers, consisting of 1.01 million retail subscribers and 1.83 million wholesale subscribers. This marks the first time the Company's wholesale subscriber base has eclipsed its retail business. Approximately 45% of the company's wholesale subscribers resided outside of Clearwire's launched markets and were users of multi-mode 3G/4G devices, from whom Clearwire will get nominal revenue.

Clearwire is now forecasting 4 million total users by the end of 2010, by which point the WiMAX footprint is expected to cover up to 120 million people.

Consolidated average revenue per subscriber (ARPU) was $21.19, composed of retail ARPU of $42.74 and wholesale ARPU of $4.46 in the third quarter. While wholesale subscriber growth remained robust, wholesale revenue reflects the impact of nominal pricing for the 45% of wholesale subscribers outside of the company's launched markets with no or little usage of the Company's network. Wholesale revenue in the third quarter was $16.5 million and is based upon minimal wholesale ARPU and usage assumptions due to unresolved issues around wholesale pricing.

Clearwire said it remain optimistic about resolving its funding needs but that the issue has not yet been resolved. The company is in discussions with a number of its major shareholders and other third parties about a number of options, including potential strategic transactions, additional debt or equity financings and/or asset sales. To conserve cash, Clearwire is significantly reducing sales and marketing spending, suspending additional retail channel market launches of the CLEAR-branded operations in select markets including Denver and Miami, delaying the introduction of CLEAR-branded smartphones, trimming its workforce by 15% and significantly cutting the number of contractors. Clearwire will also suspend zoning and permitting at many sites beyond its current build plan.

In addition, Clearwire provided an update on its LTE 2X technology trials. In August, Clearwire announced it would test coexistence scenarios for WiMAX and LTE in Phoenix using both Frequency Division Duplex (FDD) configurations using 40 MHz of spectrum paired in 2 x 20 MHz contiguous channels ("LTE 2X"), and Time Division Duplex (TDD) configurations using 20 MHz of spectrum. Initial tests have recently confirmed that the company's LTE 2X trial network achieved peak download speeds on commercially available equipment and devices in excess of 90 Mbps and upload speeds of more than 30 Mbps. Clearwire expects to conclude the tests in Q1 2011.