Thursday, October 11, 2012

Clearwire Speculation Centers on Spectrum and TD-LTE

Clearwire shares rose 71% on Thursday, as speculation rose that Softbank may bid to acquire the firm. Clearwire is the largest spectrum holder in U.S. and is closely tied with Sprint.

Clearwire operates a nationwide WiMAX network and is planning to make the transition to TD-LTE.  Its main wholesale customer and investor is Sprint, which has extended its 4G agreement through 2015.  The companies have outlined ways of bridging their FD-LTE and TD-LTE networks with dual-mode devices that are under development.  However, Clearwire's CAPEX investments in its network have slowed to a crawl in 2012 as the company conserves cash as it looks for new funding sources.

Revenue in Q2 2012 declined slightly year over year to $316.9 million primarily due to a year over year decline in wholesale revenue. Second quarter 2012 wholesale revenue of $117.6 million, was sequentially flat as compared to first quarter 2012 wholesale revenue of $117.8 million, and down (11)% year over year despite a 50% increase in wholesale usage over the same period.

Some other notes on Clearwire:

  • Clearwire holds the largest spectrum portfolio in the U.S. but in upper bands.  Its spectrum is an average 163 MHz in the top 100  U.S. markets.
  • Clearwire's network at the end of Q2 2012 covered 134 million POPs, about the same as a year earlier.
  • At the end of Q2 2012, Clearwire was serving 9.6 million wholesale subscribers (mostly Sprint) and 1.3 million retail subscribers.  This compares with 6.4 million wholesale and 1.3 million retail subscribers a year earlier.
  • ARPU for Q2 2012 was $46.12 compared with $47.59 a year earlier.
  • Clearwire's CAPEX in Q2 2012 was $24 million
  • Sequans and Qualcomm are key silicon contributors in the TD-LTE ecosystem.
  • China Mobile and Clearwire have agreed to TD-LTE roaming betweeen U.S. and China.