ORLANDO, Fla.--Clearwire's (NASDAQ:CLWR) new CFO, Hope Cochran, said the company plans to rework its retail strategy and that it expects to significantly reduce its customer-acquisition costs as a result.
"There could be a change within the retail strategy, meaning that, as we look at different distribution channels, we want them to be as efficient as possible, so you'll see changes in how we approach the retail markets," Cochran said in an interview with FierceWireless. "If we're seeing things that aren't working financially, we might pull back in those areas, but in general retail is still a strong part of our strategy."
During its fourth-quarter earnings announcement, Clearwire said it would "prudently pace" its retail growth "in an effort to maximize our financial resources," an effort that Cochran said will essentially involve pruning the retail channels that aren't working well for the company.
"We'll be looking at all the products and all the channels to see what works," she said, though she declined to speculate at the future of Clearwire's Clear-branded postpaid mobile WiMAX service or its Rover prepaid brand, which the company launched last year in a bid to target the youth market.
"The net adds from that (the retail) channel won't continue to grow at the trajectory that we saw them grow in 2010," Cochran said "We're purposely making sure that we hit that nice balance between the acquisition cost versus the number of acquisitions coming in."
Cochran said Clearwire's 2010 retail acquisition cost was around $400 per customer, while the company's "consolidated" customer-acquisition cost (the combination of the company's retail and wholesale business) was around $60-$100. For 2011, Cochran said Clearwire is targeting a consolidated customer-acquisition, with expenses of under $50 per customer.
"We will see not as many net adds from retail as we saw in the 2010 timeframe, but it will be a much more efficient net add base, meaning that they will go through channels that are really working for us and providing a strong ROI and we'll pull back on the channels that aren't," she said.
Clearwire ended the fourth quarter of 2010 with around 4.4 million total subscribers, consisting of 1.1 million retail subscribers and 3.3 million wholesale subscribers. During the fourth quarter of 2010, Clearwire added 1.5 million total net new subscribers, including 126,000 retail additions and 1.42 million wholesale additions.
Clearwire's plans to rework its retail strategy are notable in light of rumors of complaints by its wholesale customers, which include Sprint-Nextel, Time Warner Cable and Comcast. Reports have indicated Clearwire's wholesale customers aren't pleased that they have to compete directly with Clearwire's retail effort. Cochran declined to comment on those rumors, but said Clearwire's retail effort will soon be generating profits, meaning the company will continue to operate its retail business.
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