Clearwire (NASDAQ:CLWR) released its preliminary third-quarter results and said it added 1.9 million wholesale customers, a bright spot for a company that has found itself somewhat estranged recently from majority owner Sprint Nextel (NYSE:S).
Clearwire said it expects revenue of around $332 million, up 126 percent year-over-year and up from $322 million the second quarter. The company posted a 29 percent sequential growth rate in wholesale subscribers. Clearwire's wholesale subscriber additions have historically been driven by Sprint devices riding on Clearwire's mobile WiMAX network. Clearwire said it will end the third quarter with around 9.5 million total customers, up from 7.65 million at the end of the second quarter.
In a research note released after Clearwire announced the preliminary results, Credit Suisse analyst Jonathan Chaplin said the results are positive for Clearwire. "The quicker the company can ramp subs and revenues against fixed costs the smaller the funding gap," he said. "In addition, the larger their sub base the longer they have to find additional wholesale partners to augment the subs they get from Sprint. As such, these results are a big positive."
Sprint has forged ahead with plans to deploy LTE by mid-2012 on its 1900 MHz spectrum, essentially cutting Clearwire out of its LTE plans. The Sprint announcement, which came Oct. 7, caused Clearwire's stock to plunge 35 percent in the past five days. Clearwire has said it needs to raise between $150 million and $300 million for the maintenance of its existing WiMAX network and $600 million to begin rolling out LTE-Advanced network technology using the TDD configuration.
In an interview with Bloomberg, Sprint Chairman James Hance made clear that Clearwire is still important to Sprint. "No question we want them to do well; it's in our interest that they do well," he said. "Nothing good happens in a restructuring and there's nothing good in the outcome of that."
The results also come after Verizon Wireless (NYSE:VZ) CEO Dan Mead denied reports that the carrier is talking to Clearwire about buying capacity on Clearwire's network. In a series of interviews with media outlets last month, Clearwire CEO Eric Prusch said that Clearwire was negotiating with a range of carriers, including Verizon, AT&T Mobility (NYSE:T), MetroPCS (NASDAQ:PCS) and Cricket provider Leap Wireless (NASDAQ:LEAP) to sell them capacity on its network.
For more:
- see this release
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