Tuesday, August 2, 2011

Clearwire Loses Customers in Q2, Seeks Funds for LTE

Clearwire reported Q2 revenue of $322.6 million. Retail revenue and other revenue was $191.1 million and retail average revenue per user (ARPU) was a record $47.59. Pro forma wholesale revenue was $102.6 million in the second quarter 2011, or $6.18 in pro forma wholesale ARPU. Consolidated pro forma revenue and pro forma wholesale revenue exclude approximately $16.1 million of revenue related to wholesale services provided by Clearwire to Sprint in the first quarter 2011, and approximately $12.8 million of a $28.2 million settlement amount from Sprint which relates to wholesale services provided prior to 2011. The second quarter 2011 reported net loss from continuing operations attributable to Clearwire was $160.5 million, or $0.65 per basic share, and the second quarter 2011 pro forma net loss from continuing operations attributable to Clearwire was $167.0 million, or $0.68 per basic share.

Clearwire ended Q2 2011 with approximately 7.65 million total subscribers, up 365% from 1.64 million subscribers in the second quarter 2010. The subscriber base consists of 1.29 million retail subscribers and 6.36 million wholesale subscribers. During the second quarter 2011, Clearwire added 1.54 million total net new subscribers, comprised of 39,000 retail and 1.50 million wholesale net new subscribers. Clearwire's wholesale subscribers consist primarily of users of 3G/4G smartphone devices.

"Looking ahead, we will continue to seek funding to fuel our growth with the belief that our 4G network, growing customer base, unmatched and unencumbered spectrum, and notable wholesale partners put us in a uniquely advantageous position — one that we intend to maximize," said John Stanton, Chairman and Interim Chief Executive Officer of Clearwire.

Second quarter 2011 aggregate network usage by wholesale customers increased 42% as compared to first quarter 2011, driven primarily by growth in aggregate smartphone usage, which increased 74% over the same period.

Clearwire now expects to end 2011 with approximately 10 million subscribers, with most of the new subscribers coming from its wholesale business. This is an increase from the previous guidance of 9.5 million subscribers provided in May 2011. Before any impact of an LTE deployment, the company expects capital expenditures in 2011 to be less than $400 million, and operations to generate positive adjusted EBITDA in early 2012 as a result of continued implementation of aggressive cost efficiencies aimed at improving cash flow.

Clearwire also said it is looking for $600 million in new funding for the LTE rollout. It is also seeking $150-350 million as working capital to support its existing operations.

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