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Clearwire narrows losses in Q1

Thu, 05/14/2009 - 9:00am
Brian Santo

Clearwire still has plenty of cash on hand to cover expansion through 2009 and early 2010, but it is also looking for additional funding from a variety of sources, including existing investors such as Comcast, Time Warner Cable, Bright House Networks, Intel and Google.

At the same time, even before Clearwire has established mobile WiMAX service in its third U.S. market, it is already moving to encourage a global market in WiMAX connectivity.

Meanwhile, people are beginning to sign up for Clear mobile WiMAX service, helping Clearwire narrow its losses in its first quarter of 2009.

Along with reporting its financials, and announcing a shuffling and expansion of its management team, Clearwire said it reassigned Barry West – up now to the company’s president and chief architect.

West has been appointed president of international. The company said it wants to leverage West’s international reputation as a WiMAX expert by having him head up Clearwire’s new Global Alliance Partnership Program, designed to extend WiMAX collaboration initiatives with operators and industry associations around the world.

New CEO Bill Morrow introduced the new execs during the company’s Q1 analyst call, but spoke only in generalities about the Global Alliance Partnership Program.

Morrow said of West’s efforts to contact international carriers: “He is going to garner all of the operators’ intent so we can demonstrate that WiMAX is here to stay, and that WiMAX has a lot more demand associated than what perhaps is being written in the press today. And the collaborative efforts about how we can actually look at innovation, how we can look at product development, and maybe there’s even other synergies that we can look at on a legal basis across the international playing field.”

Meanwhile, Perry Satterlee is stepping down as chief operating officer. Clearwire hired G. Michael Sievert as chief commercial officer, Kevin Hart as chief information officer and Laurent Bentitou as chief people officer. CTO John Saw has been given responsibility for the deployment of Clearwire’s broadband network and technologies.

Sievert, who will oversee wholesale and retail sales, marketing and customer care, most recently was a senior vice president at Lenovo, which earlier this year purchased Switchbox Labs, which Sievert co-founded. He previously worked at Microsoft, AT&T Wireless, Procter & Gamble and IBM.

Hart had been CIO at Level 3 Communications. Bentitou recently served as vice president of human resources for T-Mobile USA.

During Clearwire’s first quarter, it added a net of 25,000 customers, pushing it past the half-million subscriber mark.

The company does not report individual market metrics, CEO Bill Morrow said, “but we can say that the rapid subscriber uptake in Portland in the first three months has been more than 2.5 times the gross adds of any of our prior 51 market launches.”

Morrow added: “Average monthly customer usage of our WiMAX services in Portland, as measured by data traffic, is significantly higher than in our pre-WiMAX markets. This indicates that better network speed and performance does in fact lead to a richer customer experience, and again gives evidence that there is more demand for mobile bandwidth than we are seeing delivered today by other mobile networks.”

Clearwire execs added that it has seen a lot of home users and a lot of students. They also said that the ClearSpot device, a portable Wi-Fi hotspot that Clear users use to connect up to 8 Wi-Fi devices with no application restrictions, is also very popular in Portland.

The company will turn on service in Atlanta in June, and by late summer in Las Vegas. Cities Clearwire previously announced it will expand into – including Chicago, Philadelphia and Dallas/Ft. Worth – will follow later in the year.

Clearwire executives reiterated that Comcast will begin reselling Clear in Portland during the summer, and that Time Warner Cable will follow in an undesignated market later this year. When asked about whether Comcast intends to resell the service in Atlanta, Morrow and Satterlee deferred to Comcast.

Clearwire said it plans to upgrade its largest pre-WiMAX markets – Baltimore, Seattle, Honolulu and Charlotte, N.C. – during 2009.

The company said it continues to target total net cash spend in the range of $1.5 billion to $1.9 billion for 2009. Clearwire said it had $2.8 billion in cash at the end of Q1. The ultimate scope and timing of Clearwire’s network build-out will largely be driven by market-by-market success and the availability of additional capital, it said.

CFO David Sach said: “We are actively looking at all funding options, including vendor financing. To date, I don’t have anything specific to announce for you, so I’ll just let you know that we are looking at all of those options, including anything from strategic investors.”

Subscriber growth over last year was 13 percent. Coupled with 7 percent growth in ARPU (to $39.52), revenue was up 21 percent. The company’s net loss was $71 million, down from $97.4 million in the first quarter of 2008.

Clearwire also said it is buying network equipment from Cisco, which also intends to provide customer premises equipment (story here).

Clearwire’s research suggests that most of its customers are unlikely to travel outside of their local markets – but not all, and for more peripatetic customers, three or four islands of connectivity won’t do. That’s why access to the Sprint 3G network, which is national, is important, and for that, dual-mode 3G/4G devices are imperative.

“Regarding dual mode devices,” Morrow said today, “we are making good progress in testing 4G/3G modems, which will enable customers to benefit from the local Clear 4G networks but also have access to the Sprint 3G network virtually everywhere else. We expect to launch the first EVDO WiMAX modem this summer.”

Clearwire executives’ comments were taken from a transcription of the company’s Q1 analyst call at Seeking Alpha (available here).

More Broadband Direct 05/14/09:
•  Clearwire narrows losses in Q1
•  DirecTV told to modify Charter bankruptcy ads
•  CSG Systems extends relationship with Cox
•  Comcast, Qwest 'say on pay' shareholder proposals fail
•  Vecima sees revenue decline 34% in Q3
•  Verizon Business, Avaya bolster VoIP, contact center capabilities
•  Level 3 deploys new high-speed content upload service
•  N.C. lawmakers may end local phone company oversight
•  NCTA supports online safety education act
•  Sony reports $1B annual loss; first in 14 years
•  Sanyo reports loss, sees profit this year
•  Intel hit with $1.45B fine in Europe
•  Broadband Briefs for 05/14/09

 

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