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Clearwire 4G Users and Data Use Booming

Clearwire exceeded 10 million subscribers in the fourth quarter but still needs to raise more money to build its planned LTE network, a task that could be funded in part by an upcoming $300 million stock offering.

The U.S. WiMax operator, which powers Sprint Nextel's 4G services, released selected preliminary fourth-quarter results on Tuesday before posting final results in the coming weeks. Wholesale and retail customers reached 10.4 million, most of those from wholesale partners, primarily Sprint.

While Clearwire estimated it had a net gain of 900,000 wholesale customers in the quarter, an 11 percent gain from the third quarter, it said aggregate WiMax network use by wholesale subscribers grew at twice that rate. Heavier data use on smartphones led the trend, with customers using 30 percent more data compared with the previous quarter. In the full year 2011, total data use by wholesale and retail customers grew 165 percent.

Sprint is the only major national carrier still offering unlimited monthly data use on smartphones, without throttling. But like other operators, Sprint continues to look for more capacity to meet continuing rapid growth in demand. It will continue to sell WiMax devices with two-year contracts at least until the end of this year and expects to use Clearwire's WiMax network at least for the next few years. But both Sprint and Clearwire also plan to build LTE (Long-Term Evolution) networks to further expand their capacity and be able to tap into a large expected market for LTE phones, tablets and other devices.

During the fourth quarter, Clearwire and Sprint announced a long-awaited plan for coordination on LTE, in which Sprint invested more in its partner and said it had deals to buy capacity on Clearwire's LTE network. Sprint also hopes to use LightSquared's planned LTE network as part of a complex 15-year plan to host that network on its Network Vision infrastructure, but that partnership is on hold pending regulatory approval for LightSquared's network. Sprint plans to offer LTE in the first half of this year.

For the fourth quarter, Clearwire estimated it achieved positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the first time, though including those factors, it expects to post net losses "for the foreseeable future."

The company estimated it had $1.11 billion in cash and cash equivalents at the end of 2011, up from $711 million at the end of the third quarter. During the quarter, it raised $716 million through the sale of new shares. But the company said it still needs to raise more capital to build its LTE network, which it would operate alongside the WiMax system.

Clearwire also said Tuesday it is planning an offering of first-priority senior secured notes, to be offered by subsidiary Clearwire Communications, to raise $300 million. It did not give a date for the offering. That money could be invested in the future LTE network, company spokesman Mike DiGioia said.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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