Wireless backhaul services provider FiberTower announced its has received its second early termination notice from Clearwire (NASDAQ:CLWR) to discontinue some of its backhaul services effective April 30. The termination represents about $434,000 in monthly service revenue, the company said. And Clearwire must pay about $1.9 million in early termination fees.
Clearwire has already paid FiberTower about $1.5 million associated with services it terminated in February. Clearwire is still maintaining service with FiberTower, paying some $80,000 per month, but that number represents about 16 percent of the total service revenue FiberTower had been billing Clearwire on a monthly basis.
Clearwire has been in cost-cutting mode as it searches for more funding.
FiberTower announced during its fourth-quarter 2010 that it was preparing for Clearwire's moves, and it adjusted its 2011 operating and capital plans in anticpation of them. FiberTower reiterated that it doesn't believe these early terminations will have a material impact on the company's cash position in 2011.
"The company reaffirms that it believes that it has sufficient liquidity to support its business through 2011 and remains focused on prudent management of its cash balance and capital outlays, and continues to explore alternatives to position the company to participate on a larger scale in the growth of wireless backhaul," FiberTower state in a release.
FiberTower inked a deal with Sprint Nextel, which is now majority owner in Clearwire, back in 2007 to backhaul WiMAX services. The company is one of the largest alternative backhaul providers in the U.S. and holds an extensive footprint in 24 GHz and 39 GHz radio spectrum bands, the former LMDS bands that were once used for fixed wireless services. It also uses fiber and microwave.
Ironically, DragonWave made a deal with FiberTower in March as part of a bid to move away from its reliance on Clearwire, which at one point accounted for about 85 percent of the company's business. DragonWave is providing high-capacity microwave solutions that will support FiberTower's microwave-based packet backhaul services. FiberTower, however, is seeing more business backhauling 3G and 4G traffic for major mobile carriers.
- see this release
DragonWave cuts Clearwire strings with FiberTower microwave deal
FiberTower fills out its fiber footprint
Investors jittery over DragonWave's customer prospects
Clearwire-dependent DragonWave watches business erode