Clearwire to launch 25 markets by year-end
Clearwire CEO Bill Morrow said Tuesday that Clearwire is planning to deploy its 4G WiMAX service in more than 25 markets by year-end, reaching approximately 30 million people. In addition, the company expects to extend its coverage to 80 markets by the end of 2010.
Morrow's comments, which were part of the firm's second-quarter earnings call with investors, primarily focused on the company's recent strides, including launching Clear in Atlanta and Las Vegas, launching a dual-mode modem, and naming Huawei as one of its key infrastructure vendors. Although he wouldn't provide specific subscriber numbers for the company's mobile WiMAX markets, Morrow did say that the company is seeing average daily subscriber uptake in July outpace June by 75 percent. In addition, he said that the uptake of mobile WiMAX is helping to offset the attrition that the company is seeing in its pre-WiMAX markets.
Morrow also said that the company is expecting to see a "substantial" increase in net adds in the fourth quarter when it will have more mobile WiMAX markets operational. "We anticipate our fourth quarter net adds will be higher than all three 2009 quarters combined," Morrow said. The company is ramping up to meet that growth. At the end of the second quarter Clearwire had 2,200 employees and it expects to have 3,000 by year-end.
Sprint Nextel, which has a 51 percent ownership stake in Clearwire and is operating its Sprint 4G service as a Clearwire MVNO, also announced 17 new markets where it would launch its 4G service this year, mirroring Clearwire's buildout plans. The carrier also said it plans to launch Sprint 4G service in Boston, Houston, New York, San Francisco and Washington, D.C., in 2010.
Here are some of the key metrics from Clearwire's second quarter:
Financials: Clearwire posted a quarterly loss of $73.4 million, comparable with its year-earlier loss of $74.6 million. Revenue rose 9 percent to $63.6 million in the quarter.
Net subscriber adds: Clearwire had 12,000 subscriber adds in second quarter 2009, giving the company a total subscriber base of 511,000. The results failed to impress at least one analyst. "We would have liked to see the company put up at least twice the number of net additions and much higher gross additions in order to demonstrate the demand for WiMAX services in its new markets," wrote Walter Piecyk of Pali Research. "We thought there was a shot for this given what we observed in Atlanta and the pricing and promotions on the product are very attractive so we are somewhat surprised to see a sequential decline in gross additions and an apparent cooling of sales in Portland." However, Piecyk added that "Sprint and Comcast are likely to get more aggressive in future quarters and the delivery of a WiMAX/CDMA access unit should help stimulate sales later this quarter and into Q4."
ARPU: Average revenue per user was $39.57, an increase of 19 cents over the prior year.
Churn: Consolidated churn was 2.8 percent, compared to 2.6 percent in the prior quarter.
CPGA: Cost per gross add was $524 up from $449 in the prior year. The company said the increase was due to sales and marketing expenses in Portland and Atlanta.
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