Clearwire’s Third Quarter Brings Mixed Bag

Tue, 11/11/2008 - 7:20am
Monica Alleven, Wireless Week

Clearwire shares fell more than 4 percent yesterday after the company reported a third-quarter net loss of $166.6 million compared to a net loss of $328.6 million in the same quarter last year.

ARPU for the third quarter was up – to $40.43, an increase of $3.02 above last year’s third-quarter level of $37.41. Churn was 3% compared with 2.3 percent in the third quarter of last year.

Clearwire added 8,300 net new subscribers in the quarter, ending with a total of 469,000 subscribers. The company has kept a lid on new subscriber growth by reducing sales and marketing efforts in anticipation of upgrading its pre-WiMAX markets to mobile WiMAX.

Net additions were below those forecast by Stifel Nicolaus analysts, who were expecting more than 14,000 net adds and a churn rate of 2.5 percent. In a research note, analyst Christopher King said Clearwire likely is beginning to feel effects from the weakening economic environment and Stifel analysts continue to view Clearwire shares as appropriate only for shareholders with a high risk tolerance. The firm’s rating remains “Hold.”

On the plus side, Clearwire’s third-quarter adjusted EBITDA reflected a loss of $72.9 million compared with an adjusted EBITDA loss of $84.1 million a year ago.

In a conference call with analysts, Clearwire CEO Ben Wolff said the company is making progress toward closing by the end of the year its deal that will combine Sprint’s WiMAX properties. Shareholders will vote Nov. 20; not yet known is when the company will get consent from lenders. Last week, the FCC gave its approval to the transaction.

When asked about the FCC’s vote last week to OK the use of white spaces for unlicensed broadband wireless, Wolff said Clearwire will look at how it might leverage white space in more rural areas.

Meanwhile, Clearwire doesn’t expect to push hard for dual-mode gear for pre-WiMAX and mobile WiMAX, but it will be interested in dual-mode devices that combine WiMAX and EV-DO/CDMA, or 4G and 3G.

Clearwire’s first mobile WiMAX market is Portland, Ore., where it expects to start adding customers in December, with an official launch in the first quarter.

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