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Clearwire revenue up, losses narrow, management reshuffle

Clearwire revenue up, losses narrow, management reshuffle

US WiMAX operator Clearwire announced Wednesday an improved set of financial results for Q1 2009. Pro forma revenue for the three months ended 31 March 2009 increased by 21 percent to $62.14m compared with Q1 2008. Top line growth was driven by a 13 per cent increase in Clearwire subscribers and a seven percent hike in ARPU to $39.52 over the same period.

The bottom line showed some improvement in that its Q1 2009 pro forma net losses were not as heavy as compared with the three months ended 31 March 2008. The WiMAX operator recorded a Q1 2009 net loss of $71m compared with a net loss of $97.4m during Q1 2008.

Bill Morrow, the recently appointed Clearwire CEO, reiterated the firm’s aim of expanding mobile WiMAX service to 80 US markets and covering 120 million people by the end of 2010, but he acknowledged that the pace of rollout could change depending on the availability of capital.

To support its expansion, Morrow announced a plan to increase the company’s 2,000-strong workforce by 50 per cent this year.

Clearwire launched its ‘Clear’ branded mobile WIMAX service in Portland, Oregon, in January 2009 and the company says it now has 500,000 subscribers in total (which includes ‘pre-wimax’ subs). The operators does not give a breakdown of how many mobile WIMAX subscribers it has other than to say that the Portland service is attracting subscribers at more than double the pace of any of Clearwire’s prior 51 market launches.

Perhaps taking Clearwire watchers by greater surprise than the financial results is the sweeping management changes announced by Morrow. This includes Barry West, formerly Clearwire president and chief architect, taking on a new role as President of Clearwire’s international business. 

New executive appointments include G. Michael Sievert, formerly CEO of Switchbox Labs (which was acquired by the Lenovo Group earlier this year) who is to join Clearwire in the newly-created role of Chief Commercial Officer, effective June 15. Other new Clearwire faces are Kevin Hart, who will serve as Chief Information Officer, and Laurent Bentitou, who will join as Chief People Officer. Perry Satterlee, meanwhile, is stepping down as Chief Operating Officer.

Clearwire’s new-look management team has many challenges ahead, not least the prospect of competing with ever-faster cellular networks and the looming spectre of LTE. Verizon says it will launch LTE in 20 to 30 US markets next year.

Access to capital could also be a problem as loss-making Clearwire moves into a more expansionist and capex-intensive phase. As of 31 December 2008, Clearwire had $3.1bn cash available, largely as a result of last year’s capital injection of $3.2bn in exchange for Clearwire equity from Intel, Google and three US cable operators (Comcast, Time Warner Cable and Bright House Networks). As of 31 March 2009, the cash pot had shrunk to $2.8bn.

Clearwire anticipates that cash spend for 2009 will be between $1.5bn and $1.9bn. Analysts at JP Morgan recently estimated that Clearwire faces a $2bn-$2.3bn funding gap, which will likely require tapping the credit markets in 2010, if not before.

Dont miss Barry West’s Keynote speech at WiMAX Forum Global Congress on 2nd June – download the programme at www.wimax-vision.com/global


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