Clearwire adds 1.7M customers, backs off spectrum sale
Clearwire will hold off on selling its spectrum for the next year, the company said in its earnings call yesterday.
On Wednesday, the company announced it had enough cash to fund its business for the next 12 months and put a near-term sale of its spectrum on hold.
The operator had considered selling off some of its unused bandwidth to help pay for the expansion of its WiMAX network.
"In the past, we talked about the option of selling excess spectrum and that we have received bids from multiple parties," said Clearwire CFO Hope Cochran. "With the near-term capital needs of our current business now satisfied, we will be extremely judicious with our spectrum assets."
Clearwire will be able to run its business without additional financing, but Cochran said the company would need to raise cash for further expansion of its WiMAX network. The company put its expansion plans on hold in February as it worked to cut expenses amid a cash crunch that threatened its ability to operate.
Clearwire continued to generate heavy losses in the first quarter despite a marked increase in sales. The company lost $227 million on sales of $242 million, compared with losses of $94 million on sales of $106 million during the same period last year.
The results did not include Clearwire's recent settlement over wholesale pricing for Sprint's data-hungry smartphone customers. Clearwire has already received $16 million in wholesale revenue from the settlement, and it got another $181 million from Sprint last week. That revenue will be posted in Clearwire's second-quarter results.
In an effort to control costs, Clearwire is scaling back on its brick-and-mortar retail strategy in favor of online sales and has dropped its Rover prepaid brand, which was targeted at younger consumers. Nearly a quarter of Clearwire's workforce has been laid off, and the company now has 3,300 employees, down by roughly 1,000 from the third quarter of last year.
Clearwire's international assets are also on the chopping block. Cochran said the company plans to divest some of its overseas network assets, which cost Clearwire $30 million in impairment charges in the first quarter. The company offers WiMAX services in Seville and Malaga, Spain, and operates a pre-WiMAX network in Brussels and Ghent, Belgium.
Wholesale customers remained a strong point for Clearwire in the first quarter. The company added 1.6 million wholesale customers and 155,000 retail customers during the first three months of 2011, bringing its total subscriber base to 6.14 million.
The growth in wholesale customers was largely attributed to Sprint, which resells Clearwire's WiMAX service under its own brand.
The healthy growth in Clearwire's wholesale customers prompted the company to raise its outlook for 2011. The company now expects to end the year with 9.5 million subscribers, up from its previous forecast of 8.8 million subscribers.
Wholesale ARPU slipped to $5.04, from $12.51 last year. Retail ARPU rose to $46.32, from $42.77 last year. The decline in wholesale ARPU was attributed to dilution from the expansion of Clearwire's WiMAX network over the past year.
Churn improved in Clearwire's wholesale segment but worsened slightly with its retail customers. Wholesale churn dropped to 1.3 percent, from 2.7 percent last year, while retail churn rose three-tenths of a percentage point to 3.3 percent.