Clearwire (NAS: CLWR) reported gains in subscribers during its third quarter, but the carrier's results continue to be clouded by uncertainty in its future.
Clearwire gained 1.89 million total net new subscribers, comprised of 35,000 retail and 1.86 million wholesale net new subscribers, during the third quarter. The carrier pointed out the gains surpassed Verizon (NYS: VZ) Wireless' LTE subscriber additions in the quarter.
Clearwire attributed the gains to its ability to meet users' demands for mobile data. Indeed, the company said its third-quarter aggregate network usage by wholesale customers increased 34 percent compared with the second quarter of 2011, "driven primarily by growth in aggregate smartphone usage." The company declined to provide specific usage figures.
Clearwire said it expects to exceed its previous guidance of 10 million subscribers by the end of this year. The company also said it now expects capital expenditures in 2011 to be less than $300 million, around $100 million lower than its previous guidance.
Despite the relatively rosy results, Clearwire still needs an additional $600 million to launch its planned LTE network. Clearwire executives said it would evaluate a number of options, including vendor financing, to pay for the LTE buildout.
Further, Clearwire addressed Sprint Nextel's (NYS: S) recent moves to limit Sprint's reliance on Clearwire's WiMAX network. Sprint recently said it plans to cap its WiMAX users' data usage, thereby potentially cutting into the revenues Sprint pays to Clearwire. Sprint also said it plans to discontinue selling WiMAX devices by 2012. Clearwire executives said the company cannot yet predict the effect these moves will have on Clearwire's future finances.
Clearwire executives also declined to comment on Sprint's launch of the iPhone, which will not use Clearwire's network and could cut into Sprint sales of WiMAX-capable devices.
Clearwire CEO Erik Prusch said "there remains a gap" between Clearwire and Sprint, but he said he hopes the companies will be able to reach an agreement on possible funding and network roaming. Sprint last week disclosed a non-binding agreement between Sprint and Clearwire that will cover the design of Clearwire's planned LTE network.
Subscribers: During the third quarter, Clearwire added 1.89 million total net new subscribers, comprised of 35,000 retail and 1.86 million wholesale net new subscribers. (Clearwire's wholesale subscribers consist primarily of Sprint 3G/4G smartphone customers.) Clearwire ended the third quarter with 9.54 million total subscribers, up significantly from the 2.81 million subscribers it recorded in the third quarter of 2010. Clearwire's subscriber base consists of 1.32 million retail subscribers and 8.22 million wholesale subscribers.
ARPU: Clearwire's third-quarter retail average revenue per user was $47.05, up from $43.10 in the third quarter of 2010. The carrier's third-quarter wholesale ARPU was $6.20, up from $4.46 in the year-ago quarter.
Financials: Clearwire's third quarter revenue was $332.2 million, a 134 percent increase over the year ago quarter, when Clearwire reported $142.2 million in revenue. Clearwire's third-quarter net loss was $84.8 million, or $0.35 per basic share.
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