Clearwire slashes LTE deployment target from 5,000 sites to 2,000 sites
Clearwire (NASDAQ:CLWR) significantly cut the number of TD-LTE sites it plans to deploy from 5,000 sites by mid-year 2013 to 2,000 sites. The company said that the reduction in TD-LTE sites was to better align its buildout with that of Sprint Nextel (NYSE:S). Sprint plans to offload excess LTE data traffic onto Clearwire's network.
"We want to make sure our LTE network is built in conjunction or alignment with Sprint introducing devices capable of using it," explained Clearwire CEO Erik Prusch during the company's earnings call with investors.
Prusch explained that Sprint has said it will introduce LTE-capable data devices that can access the 2.5 GHZ band (Clearwire's spectrum band) in the second quarter of next year, with 2.5 GHz-capable smartphones coming in the third quarter. "This is prudent and it preserves cash so we don't build in advance of the revenue stream," Prusch added.
However, Clearwire would not provide more details on how it would eliminate those extra 3,000 sites from the plan, nor would it say whether Clearwire is cutting the number of sites per market or reducing the number of markets deployed. Clearwire CTO John Saw said that the company will end the year with 800 TD-LTE commissioned sites and it is on pace to meet the 2,000 site target by June 2013. He added that many sites are LTE-ready and only require the addition of a line card and a software flash to make them ready.
When questioned whether the reduction in TD-LTE sites would impact Sprint's payments to Clearwire as part of the companies' MVNO agreement, Prusch said Clearwire is still eligible for the same payments as it was before.
As a result of the reduction in the number of its planned sites, Clearwire reduced its 2012 capex guidance to $125 million to $175 million, from $350 million to $450 million.
Clearwire ended the quarter with $313.9 million in revenue. The company's third quarter wholesale revenue was $116.5 million, flat compared to its second quarter. Clearwire also said that retail and other revenue increased 1 percent year-over-year to $197.4 million in the third quarter. CFO Hope Cochran added that the company has enough cash to fund the business for a year.
Here's a breakdown of Clearwire's other key metrics in the quarter:
Subscribers: Clearwire counted 10.5 million total customers at the end of the third quarter. That figure includes 1.4 million retail subscribers and 9.1 million wholesale subscribers.
CPGA: Clearwire's cost per gross add was $191 in the third quarter, down from the $288 it scored in the third quarter of 2011.
Churn: The company's retail churn was 5.1 percent in the third quarter, up from 4.2 percent in the same quarter of 2011.
ARPU: Clearwire's average revenue per user was $45.06, down from the $47.05 it reported in the third quarter of 2011.
Special Report: Wireless in the third quarter of 2012