With its eyes focused on the future, Clearwire (CLWR) reported first quarter results that showed that future cannot come soon enough.
The carrier reported a significant drop in customer additions, plunging from nearly 1.8 million subscribers during the first quarter of 2011 to 586,000 customers this year. Wholesale operations, made up predominately of Sprint Nextel customers, constituted a vast majority of those net additions with Clearwire’s retail operations seeing just 49,000 net new customers this year. Clearwire ended the quarter with 11 million total customers on its network.
Customer churn looked to have impacted growth with wholesale churn increasing from 1.3% in 2011 to 3% this year, while retail churn surged from 3.3% to 3.7%.
Average revenue per user remained basically flat at $46.83 year-over-year, while retail cost per gross addition dipped from $295 to $242. Clearwire’s management noted this was helped by a recent move to stop subsidizing device prices.
Highlighting its current fiscal and network transition position, capital expenditures took an expected drop from $130 million during the first quarter of 2011 to just $23 million this year.
Clearwire’s overall financial picture looked a bit brighter this year as total revenues increased nearly 28% to $322.6 million. Operating expenses also dropped from $884.2 million in 2011 to $744.5 million this year, resulting in an improvement in operating losses from $631.3 million in 2011 to $421.9 million this year. Net losses also improved from $227 million during the first quarter of 2011 to $181.8 million this year.
Investors seemed dulled by Clearwire’s results, as the carrier’s stock was trading down just under 2% early Friday. Most, including analysts, seemed more interested in the carrier’s longer-term LTE plans, which are not expected to kick in until next year. That leaves Clearwire with three fiscal quarters in which to continue to keep people interested.
Sprint Nextel appears to be tapering down its emphasis on Clearwire’s current WiMAX offering, having said it would not unveil any additional WiMAX-enabled devices. The carrier has also begun to focus most of its “4G” marketing efforts on its soon-to-launch LTE service that at least through early next year will rely on Sprint Nextel’s own native network.
One potential positive for Clearwire this year could be Sprint Nextel’s plans to rollout WiMAX services through its prepaid sub-brands. This could provide a spike in growth for Clearwire’s wholesale operations, though with the challenges that come along with churn-happy prepaid customers.
Clearwire also has recently signed a number of wholesale agreements for both its current WiMAX operations and future LTE plans that will further emphasize the carrier’s non-direct channel moving forward.
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