Press Release: Clearwire Reports Second Quarter 2007 Results

Clearwire Reports Second Quarter 2007 Results

Service Revenue More Than Doubles in Second Quarter 2007 as Compared to Second Quarter 2006, with Total Subscriber Count Reaching 299,000 Subscribers, up from 130,000 at Same Time Last Year

Initial 25 Markets Turn Cash Flow Positive as a Group with 14 Markets Now Cash Flow Positive

Expansion Continues with High-Speed Internet Service Launched in Five New Markets and Coverage Increased by an Additional 1.5 Million People; Residential Voice Services Now Offered in 28 Markets, up from 17 in Prior Quarter

KIRKLAND, Wash., Aug. 6 -- Clearwire Corporation, a leading provider of wireless high-speed Internet service, today reported financial and operating results for the second quarter 2007.

Clearwire reported approximately 41,000 net subscriber additions for the quarter ended June 30, 2007. The increase brings the total subscriber base to 299,000, a 130 percent increase over the subscriber base at the end of the second quarter of 2006, and a 16 percent sequential quarter increase. Clearwire ended the quarter with approximately 11.6 million people covered by its network in 43 domestic and international markets compared with 29 markets and 5.8 million people covered by Clearwire's network in the second quarter of 2006. During the quarter, Clearwire launched 5 new markets including Richmond, Va., Wenatchee, Wash., Lubbock and Longview, Texas and Ghent, Belgium and increased its network coverage by approximately 1.5 million people.

On a consolidated basis, Clearwire's second-quarter service revenue more than doubled to $35.5 million from $15.4 million in the same quarter of 2006. The robust growth in revenue was driven by the strong increase of the company's subscriber base when compared to the same period in 2006. Clearwire revenues were further buoyed by strong Average Revenue per User, or ARPU, resulting from maturation of existing markets, expanded availability of its residential voice service, and several one-time items. Clearwire's gross margins related to service revenue improved for the quarter to $12.2 million or 34 percent, up from $3.5 million or 23 percent in the same quarter in 2006. On a sequential quarter basis, gross margins were lower as expected due to the impact of new market launches that occurred in the second quarter and that are expected to occur in the second half of the year.

Clearwire reported an Adjusted EBITDA loss of $70.2 million in the second quarter of 2007 compared with an Adjusted EBITDA loss of $45.9 million in the second quarter of 2006, driven primarily by its continued investment in the construction and deployment of wireless networks in new markets and subscriber acquisition costs. Cost per Gross Addition, or CPGA, climbed during the quarter due to the effects of new market launches and the seasonal nature of the business.

Consolidated service revenue for the six months ended June 30, 2007, was $64.8 million, an increase of over 160 percent from $24.9 million in the same period last year. The rapid revenue growth was fueled by continued strong subscriber growth. Consolidated service gross margin for the six-month period was $24.7 million or 38 percent, up from $4.3 million or 17 percent for the same period in 2006. Adjusted EBITDA loss for the same period was $121.7 million compared to $78.9 million for the six months ended June 30, 2006, reflecting the substantial increase in the company's investment in new market development and customer acquisition costs, year over year.

"We are pleased that both aspects of Clearwire's business -- new market development and construction on the one hand, and high-speed Internet and voice services on the other -- met our expectations for the first half of the year. Our wireless network covered approximately 11.6 million people at the end of the first half, and we had markets covering an additional 20 million people under various stages of development. On the operations side, we increased our subscriber base to just under 300,000 and turned our initial 25 markets Market EBITDA positive, demonstrating continuing robust demand for our services and the financial health of our business," said Ben Wolff, Clearwire's chief executive officer.

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