Clearwire Adds 1.6 Million Wholesale Subs In Q1

Wireless broadband operator Clearwire added a quarterly record 1.8 million net subscribers in the first three months of 2011, 1.6 million of which were through wholesale partners including Sprint Nextel, Comcast and Time Warner Cable.

Clearwire had approximately 6.15 million total subscribers at the end of March, up more than sixfold from 971,000 subscribers in the first quarter of 2010. The subscriber base comprises 4.86 million wholesale subscribers, most of which are users of 3G/4G multimode devices, and 1.29 million retail subscribers.

Clearwire now expects to end 2011 with approximately 9.5 million subscribers, with most of those subscribers coming from its wholesale business. That's up from its previous guidance of 8.8 million subscribers provided in February 2011.

"During the quarter we made good progress toward our objective of achieving positive EBITDA in 2012 by executing new agreements with Sprint, delivering strong post-pay subscriber growth and company-best wholesale revenue growth, as well as significantly lowering our operating costs," Clearwire chairman and interim CEO John Stanton said in announcing the results Wednesday.

Last month, Sprint and Clearwire came to terms on a new long-term wholesale agreement for wireless data services, under which Sprint agreed to pay Clearwire at least $1 billion during 2011 and 2012 for 4G services and which allows for usage-based pricing for most 4G wireless broadband services provided to Sprint.

Clearwire is majority owned by Sprint, which has a 54% stake, with other investors including Comcast, Time Warner Cable, Bright House Networks, Intel and Google. Comcast, TWC and Bright House have separate wholesale agreements with Clearwire and Sprint to offer 3G and 4G wireless services.

Clearwire earns less from its wholesale subscribers. For wholesale subscribers with minimal or no usage on Clearwire's WiMax network -- including those outside of Clearwire's service areas -- the company receives nominal revenue, subject to certain exceptions.

Clearwire's consolidated pro forma revenue for the first quarter 2011 was $258.1 million (which includes $16.1 million of wholesale revenue from Sprint related to Q1 2011 that will be recorded in Q2 2011). Wholesale revenue was $77.0 million, or $6.37 average revenue per unit for wholesale customers in the first quarter 2011. That's compared with retail and other revenue of $181.1 million in the first quarter 2011, with retail average revenue per unit at a record $46.32.

The first quarter 2011 actual net loss attributable to Clearwire was $227.0 million, or $0.93 per basic share, versus a net loss of $94.1 million ($0.47 per share) in the year-ago period.

At the end of the first quarter 2011, Clearwire operated networks covering areas where approximately 131 million people reside globally, including approximately 126 million people in 4G markets in the U.S. In the first quarter 2011, the company added an additional 14 million covered people to its domestic 4G service areas.

Clearwire's loss from abandonment and impairment of network and other assets for the first quarter of 2011 was $202.2 million, compared with $611,000 for the first quarter 2010.

That charge for the first quarter of 2011 includes $31.1 million in write-offs related to abandonment of projects that "no longer fit within management's strategic network plans," as well as the termination of some tower leases resulting in a charge of approximately $140.8 million, the company said. Additionally, network assets and spectrum in two of the company's international entities were determined to be impaired resulting in a charge of $30.3 million for the quarter.