Clearwire Looks Forward To A Very Different Year

WiMAX upstart clwr closed out 2010 with its earnings release yesterday, completing what was one of the most-watched infrastructure builds in recent memory.  They finished the year covering 112M people across the country, a number which is now 119M as of mid-February.  They added 1.5M subscribers for a total of 4.4M, of which 27% live in areas they don’t serve yet.  There was substantial speculation beforehand that the company would completely abandon its retail efforts in favor of a pure wholesale model, but that didn’t happen.  The company will focus on wholesale, but reiterated its support for the retail side as well.

Revenues for the fourth quarter were $181M, which was a bit below the average of analyst expectations, but it was based on a low contribution from Sprint due to the dispute they’ve been having over that 27% who don’t live in Clearwire’s markets.  On that front, they say a solution is imminent.  Clearwire’s revenues of course are nowhere near what they need to be to cover the company’s costs of operation, and therefore they plan to spend 2011 doubling their subscriber base and increasing ARPU while streamlining operations.  What new markets they enter are expected to be in rural areas where they must use the spectrum or lose it, and they expect to bring coverage up just to 130M people by the end of the year.  

Capex is projected to fall to just $400M in 2011, down from $2.7B in 2010.  That of course is because they need to raise money if they want to keep building, and they haven’t yet.  All this could change quickly though if they manage to raise another couple of billion.  But if not, their plan is to go EBITDA positive in 2012, and they say they have the cash to do it.  I’m sure that will be disputed by the company’s many detractors, but one thing is sure – 2010 was about the speed and success of the buildout, but 2011 will be about the improvement in the numbers.

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Categories: Financials · Wireless