Nobody really cared much about the fourth quarter financials that clwr reported today, they had eyes only for news of the great WiMAX buildout. That’s understandable of course, because Q4 results end that chapter in the company’s life. After finally getting hitched with Sprint’s Xohm and raising $3B, the company moving forward now will be so dramatically different that comparisons and trends are rather pointless, and Q4’s revenues of $20.5M and loss of $118M don’t tell us much. Hey, at least nobody cares to what extent the economy is hurting sales! Instead, we listened to what 2009 will bring.
It’s all about the buildout, and that’s something Clearwire at least has some control over. In 2009 Clearwire intends to bring WiMAX to eight major markets: Atlanta, Las Vegas, Chicago, Charlotte, Dallas/Ft. Worth, Honolulu, Philadelphia and Seattle. That will give them ten in total, including Baltimore and Portland which are already live. In 2010 they plan to reach New York, Boston, Washington, D.C., Houston and the San Francisco Bay Area. I say ‘plan to’ rather than ‘will’ or ‘expect’ because these days it is practically impossible to predict what will happen three months from now – let alone 24 months. So why mention 2010 targets at all? Just so people don’t say ‘but what about New York and LA?‘ because you know they would ask, even if the roadmap obviously goes … off the map.
2009’s buildout will require capital expenditures of between $1.5B and $1.8B, or a bit more than half of the $3B they raised. That puts them on a pace where they would need to raise money for 2011, but that pace could easily change in either direction depending on how things go. It will be interesting to see the dynamics of this buildout. I don’t think anyone really knows how much it will or will not cost, how long it will take, or how quickly subscribers will sign up as each market comes online. There are just too many variables and not enough historical datapoints. That will make them interesting to watch, especially since they are building a network from the ground up rather than hunting down more cost savings opportunities on their spreadsheets like everyone else nowadays. (Yes I know they need to, but it’s still boring!)
Of course, it has been LTE that has gotten the press lately, from Verizon Wireless to Vodafone and Teliasonera, that alternative next generation wireless standard has been on the march. The question keeps being asked, will Clearwire be quick enough to beat LTE? I think it is the wrong question, the only issue is whether they can make it to viability. People often underestimate the hunger for a truly viable alternative to the incumbents, that’s the only hurdle they need to jump in order to snowball. Of course, it’s a high hurdle.
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