Clearwire confirms Verizon bid for spectrum, still aims for Sprint deal

With its fate still uncertain, Clearwire (NASDAQ:CLWR) revealed relatively sluggish first-quarter results, which are likely the company's last as an independent entity. The company also said it continues to recommend Sprint Nextel's bid to acquire Clearwire over Verizon Wireless' competing bid to acquire some of Clearwire's spectrum license leases.

On the company's earnings conference call, Clearwire CEO Erik Prusch confirmed that Verizon Wireless (NYSE:VZ) made an unsolicited offer to Clearwire to purchase Clearwire's spectrum license leases in major markets for up to $1.5 billion. The bid is a counter to Sprint Nextel's (NYSE:S) $2.97-per-share offer to buy the roughly 50 percent of Clearwire that it does not already own. Clearwire plans to hold a shareholder meeting May 21 to vote on Sprint's offer.

Complicating the situation is Crest Financial, the largest minority shareholder in Clearwire, which is waging a proxy battle in an effort to block the Sprint deal. 

And hanging over the whole situation is Dish Network (NASDAQ: DISH), which has made a conditional $3.30-per-share offer for Clearwire as well as a $25.5 billion bid to buy Sprint.

A special committee of Clearwire's board is evaluating the Verizon and Dish deals, but is still recommending the Sprint transaction, Prusch said.

Here's a breakdown of Clearwire's key quarterly metrics:

TD-LTE: Clearwire said it currently counts 1,600 sites commissioned for TD-LTE network technology, which the carrier plans to launch this year to replace its aging WiMAX network. Clearwire CTO John Saw said the sites are ready in terms of backhaul and just need to be connected to Sprint's core network.

Clearwire expects to have 2,000 TD-LTE sites completed by the middle of the year and 5,000 by the end of the year. Prusch said that the first sites will be in major markets, including Los Angeles, New York City, Miami and San Francisco. He also said Clearwire has been working with Sprint on interoperability testing to plan for Sprint's expected launch of TD-LTE devices. Sprint CEO Dan Hesse said earlier this week that, assuming the Clearwire deal closes by mid-year, Sprint can begin launching devices in the late third quarter that take advantage of TD-LTE technology on Clearwire's 2.5 GHz spectrum.

Subscribers: Clearwire ended first quarter of 2013 with around 9.4 million total subscribers, down from around 9.6 million at the end of the fourth quarter. The company counted retail net subscriber additions of around 108,000, up 10 percent year-over-year and 8 percent sequentially. The company has around 1.5 million retail subscribers. Clearwire noted it notched record retail gross additions of around 287,000. 

However, during the period, the company posted 270,000 wholesale net subscriber losses. Wholesale subscribers declined 18 percent year-over-year and 3 percent sequentially. The company had 7.9 million wholesale subscribers at the end of first quarter. As it has in the past, Clearwire blamed the wholesale subscriber decline on the fact that Sprint is no longer selling WiMAX smartphones--Sprint is instead pushing devices running on its LTE network.

Sprint expects to cover 200 million POPs with its LTE network by the end of 2013. Sprint plans to use Clearwire's forthcoming TD-LTE network as a hotspot offload network for its own LTE service.

CPGA: Clearwire's retail cost per gross addition came in at a record low $143, compared to $155 in the fourth quarter 2012 and $242 in first quarter of 2012. Clearwire said that both the sequential and year-over-year improvements are primarily due to improved efficiencies in retail selling expenses associated with its no-contract offering and higher gross adds, partially offset by increased equipment subsidies.

Churn: Clearwire's retail churn was 4.2 percent, down from 5 percent in the fourth quarter but up from 3.7 percent in the year-ago period.

ARPU: Retail average revenue per user was $43.49, which was down from $44.10 in the fourth quarter and $46.83 in the year-ago period. The declines were primarily due to lower equipment lease revenue under the no-contract offering that the company fully launched in first quarter of 2012.

Financials: Clearwire reported an operating loss of $303.6 million, less than its $421.8 million loss in the year-ago period. Total revenue slipped slightly to $318 million from $322.6 million in the year-ago quarter. The company's wholesale revenue was $114.9 million and its retail revenue was $183.7 million.

For more:
- see this release
- see this Reuters article

Special Report: Wireless in the first quarter of 2013

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