WiMax service provider Clearwire posted record subscriber growth of 1.8 million in the first quarter and said it no longer plans to sell radio spectrum this year to raise money. Nevertheless, it reported another substantial quarterly loss.
The company’s revenue soared to US$242 million from $106 million a year earlier, as its subscriber base grew to about 6.15 million, counting both users of its own WiMax service and those who access the network via Sprint Nextel, Comcast and other partners.
After the quarter ended, Clearwire reached an agreement with Sprint Nextel in which it will pay Clearwire about $1 billion over the next two years for its customers’ use of the WiMax network. Because the deal is retroactive, it includes a $16.1 million payment for the first quarter, which will be added to Clearwire’s revenue.
Clearwire, majority owned by Sprint, got a head start on building a so-called 4G (fourth-generation) mobile data network before Verizon launched its LTE (Long-Term Evolution) infrastructure late last year and ahead of AT&T’s planned LTE deployment coming this year. But it has struggled to fund the massive cost of building a brand-new network and last year was forced to cut back retail sales efforts under its own brand.
In the first quarter ended March 31, Clearwire posted a net loss of about $227 million, or $0.93 per share. But it expects to achieve positive EBITDA (earnings before interest, taxes, depreciation and amortization) in 2012. The company said it has enough cash and investments to continue operating for at least the next 12 months.
“We grew rapidly, and we substantially cut costs,” Chairman and Interim CEO John Stanton said on a conference call to discuss the results.
Last year, Clearwire said it was discussing the possible sale of some of its radio spectrum, one asset that it has in abundance compared with other service providers. One possible customer was believed to be T-Mobile USA, which has since agreed to be acquired by AT&T. But executives on the conference call said they don’t expect to sell any spectrum this year.
Such a sale is “something we don’t have to consider in 2011,” Stanton said. The company’s other options for raising money include debt offerings and the sale of stock, he said.
Clearwire will continue to hold back on marketing for its own brand of WiMax service, called Clear, which it began to do last year, executives said. It will cut back on more expensive retail channels, such as stores, and rely more on reaching potential subscribers through telesales and the Web, according to Stanton. The cost for acquiring a retail customer has already been cut by more than 50 percent over the past year, the company said. Still, Clearwire expects continued double-digit growth in retail subscribers and revenue for the rest of this year.
Meanwhile, the company expects a doubling of revenue this year from its wholesale business, a majority of which comes from Sprint subscribers using the WiMax network. Clearwire’s top goal is to drive wholesale growth, Stanton said. The recent deal with Sprint, under which the carrier will pay Clearwire based on how much Sprint subscribers use the network, removed a cloud of uncertainty that had hung over the company for months.
Sprint and Clearwire are also in discussions regarding Sprint’s planned network modernization, according to Stanton. It has spectrum that could help Sprint better serve some urban areas, he said. In February, comments by one Sprint executive hinted that Sprint might build an LTE network on its own, possibly bypassing Clearwire for 4G infrastructure.
Clearwire itself is testing LTE in a trial that it expects to conclude around the middle of this year, according to Chief Technology Officer John Saw. He declined to discuss the timing of a possible rollout but said Clearwire would make the decision jointly with its wholesale partners.
The company’s WiMax network now reaches approximately 130 million U.S. residents, Stanton said. He expects Clearwire to finish the year with 9.5 million total subscribers, including retail and wholesale.
In after-hours trading late Wednesday, Clearwire (CLWR) shares were up $0.04 at $5.16.
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 email@example.com