Clearwire posts Q3 loss
Clearwire announced a third-quarter loss hours after confirming it would sell $1.56 billion in shares to its major investors, including Comcast, Time Warner Cable, Bright House Networks, Intel and majority owner Sprint.
The company said it added 49,000 new subscribers in its 13 4G WiMAX markets in the third quarter, with the bulk of those adds coming from the three largest markets of Atlanta, Portland, Ore., and Las Vegas.
As of now, the company has 4G in almost two dozen markets, plans to have it in more than two dozen by the end of the year, and will not only continue to expand into new markets in 2010 (thanks to the new investment), but will also continue to upgrade legacy, pre-WiMAX markets.
The company expects customer growth in the fourth quarter to remain level with that of Q3, said CEO Bill Morrow in the company’s analyst conference call, according to the transcript of the call compiled by Seeking Alpha.
The company said the money its partners have promised thus far, plus proceeds from a debt offering, should get the company through most of 2010, but Morrow indicated Clearwire might still come in a bit short. “It’s hard to say exactly what is going to come in, so it could very well be that we need some additional funds as we go forward into the next year. There’s a couple of variety of different sources should our refinancing be successful that we are on the road with right now that will allow us to close the gap to be able to do that,” he said.
The company said that with its 49,000 new 4G subscribers, it now has a total of 173,000 4G subs. As an indicator of the popularity of the service, Morrow explained that when the company’s pre-WiMAX customers upgrade to WiMAX, their data consumption doubles.
The company’s total number of customers is 555,000. The sub growth led to a 13 percent increase in revenue, to $68.8 million, from the third quarter a year ago. The company’s Q3 ’09 loss was $194 million, greater than the $146 million shortfall recorded in the third quarter of 2008.
The company had $2 billion in cash and equivalents at the end of Q3.
Comcast is reselling Clearwire WiMAX in Atlanta, Bellingham, Wash., Portland and Philadelphia, and it will add Chicago and Seattle later this year. Time Warner Cable will launch Road Runner Mobile 4G in Charlotte, Greensborough and Raleigh (all in North Carolina) in December, with plans to include Dallas, Honolulu and Maui. Sprint is reselling Clear as Sprint 4G in most markets where it is available and is touting its 3G/4G modems in markets around the country.
As for Google’s decision not to participate in the latest round of financing: “[Google] has put $500 million into the company ... which was one of the largest investments they've ever made into a different company,” Morrow said in response to a question raised by John Hodulik of UBS. “I wouldn't read anything negative into it whatsoever. Eagle River is involved, and [the] companies and Sprint are putting big chunks of change in this to go forwards, and we're thrilled with it.”
– Wireless Week’s Maisie Ramsay contributed to this report