Clearwire continues to lose customers, future remains clouded

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Clearwire continued to bleed customers during the final three months of 2012 as uncertainty regarding the carrier’s future plans seem to be impacting ongoing operations.

During the fourth quarter, Clearwire said it lost 906,000 net customers, with a gain of 9,000 retail subscribers offset by the loss of 915,000 wholesale customers. Those wholesale customers are almost exclusively subscribers to Sprint Nextel’s WiMAX-based “4G” offering. Clearwire’s customer losses were a stark contract from the year-ago period when the carrier posted 873,000 net customer additions that included a loss of 31,000 retail customers offset by the gain of 904,000 wholesale customers.

Clearwire ended 2012 with nearly 9.6 million total customers on its network, which was down approximately 800,000 customers from that base at the end of 2011.

Impacting the carrier’s growth was a large increase in customer churn, with wholesale churn surging from 2.9 to 7.3% year-over-year, while retail churn increased from 3.9% to 5%.

Average revenue per user also continued to slide for Clearwire, falling from $46.69 during the fourth quarter of 2011 to $44.10 at the end of 2012. Offsetting the decreased consumer spending each month was a steep drop in the costs associated with adding new customers, which fell from $259 in 2011 to $155 during the final quarter of 2012.

Highlighting its future, Clearwire did report that capital expenditures ballooned from $23 million during the fourth quarter of 2011 as the company had pretty much shut off any investments in its legacy WiMAX network to $102 million during the final quarter of 2012 as it prepared to begin rolling out LTE equipment across its footprint.

Financially, total revenues dropped year-over-year from $361.9 million during the fourth quarter of 2011 to $311.2 million in 2012. However, lower expenses helped Clearwire trim total losses from $433.1 million in 2011 to a loss of $312.7 million in 2012.

For the full year, revenues increased slightly from $1.253 billion in 2011 to $1.265 billion in 2012. However a steeper drop in expenses throughout the year managed to clip net losses from $2.39 billion in 2011 to $1.38 billion in 2012.

“Our full year 2012 results demonstrate our continued focus on reducing costs, managing revenues and liquidity, and providing exceptional service to our customers during a transition period as we build an LTE network equipped to provide wireless consumers the speeds and capacity they desire,” noted Clearwire CEO Erik Prusch in a statement.

Clearwire is currently in the midst of competing takeover bids by majority owner Sprint Nextel and upstart Dish Networks. Sprint Nextel, which recently increased its stake in Clearwire and is relying somewhat on the carrier to bolster its own LTE plans, placed and had accepted a bid of $2.2 billion for the remaining stake in Clearwire late last year. That bid followed a takeover announcement of Sprint Nextel by Japan’s Softbank for $20.1 billion.

However, Dish came back early this year with a superior takeover attempt of Clearwire that is being mulled over by Clearwire’s management.

Analysts noted that in a Securities and Exchange Commission filing, Clearwire claims that if an acquisition by Sprint Nextel were to not happen, Clearwire might be forced to “look at restructuring.”

“This is interesting because Clearwire hasn’t summarily rejected Dish’s offer, and has gone on record saying it will consider all offers before making a decision,” noted a report from Trefis. “However, we believe the proxy filing is directed towards the minority shareholders of the company, who have expressed their displeasure with Sprint’s offer of $2.97 a share and feel the board isn’t doing its fiduciary duty by negotiating a higher price for the company.”

Clearwire’s stock (CLWR) was trading relatively unchanged early Wednesday at around $3.18 per share.

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Dan Meyer

Editor-in-Chief, Telecom Software, Policy, Wireless Carriers
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Dan Meyer started at RCR Wireless News in 1999 covering wireless carriers and wireless technologies. As editor-in-chief, Dan oversees editorial direction, reports on news from the wireless industry, including telecom software, policy and wireless carriers, and provides opinion stories on topics of concern to the market such as his popular Friday column “Worst of the Week.”

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