Clearwire (NASDAQ:CLWR) CFO Hope Cochran said that T-Mobile USA's plans to acquire MetroPCS (NYSE:PCS)--and Sprint Nextel's (NYSE:S) rumored plan to make a competing bid for MetroPCS--won't have an effect on Clearwire's long-term business prospects. However, she said that the noise around MetroPCS could distract Clearwire's potential wholesale customers.
Cochran was questioned about reports that Sprint--a Clearwire investor and the company's largest wholesale customer--will attempt to steal MetroPCS away from T-Mobile.
"There are two issues going on in wireless right now: scale and spectrum," Cochran said during her appearance at the Credit Suisse Global Credit Products Conference. "I think this addresses the scale issue nicely. I don't think it addresses the spectrum issue."
"I think we've all heard Metro talk publicly about the fact that they need spectrum, and they need spectrum fairly significantly," she said. "So I don't know how combining a spectrum-constrained company with another spectrum-constrained company really solves that. I do think you can get some efficiencies, and that's very helpful and good, and can give them a little bit of breathing room. But in terms of really solving the capacity problem, I don't see it solving that."
Clearwire has long hoped to sell access to its vast 2.5 GHz spectrum holdings to capacity-constrained network operators.
Cochran said that the merger-and-acquisition activity in the wireless market is affecting Clearwire's ability to sign up new wholesale customers. "You can't say it doesn't have an effect," she said.
Mergers and acquisitions "can distract, and distracting is not helpful. But I don't think it changes the fundamental equation," she said, noting that discussions with carriers about their networks "take time."
Cochran also addressed Clearwire's recent disclosure that it might delay part of its TD-LTE network buildout. "Our agreements with Sprint also provide flexibility to modify the pace of our LTE deployment and remain eligible for the full amount of LTE prepayments from Sprint," Clearwire noted in a recent Securities and Exchange Commission filing. "As such, in order to better align our capital expenditures with the receipt of expected LTE revenues, we are currently evaluating our plans and may elect to delay a portion of our deployment schedule accordingly."
Cochran said Clearwire wants to make sure that when it launches LTE it will begin making money off the effort quickly--which could lead to a delay in its LTE launch.
Clearwire currently operates a WiMAX network that covers around 130 million POPs. The company plans to launch an LTE network next year. The company eventually plans to add LTE capability to around half of its WiMAX cell sites. Sprint resells Clearwire's WiMAX services and plans to offload its excess LTE network traffic to Clearwire's planned LTE network. Additional Clearwire customers include EarthLink, Leap Wireless (NASDAQ:LEAP) and others.
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