Clearwire continued to meander between its past and future during the first quarter of the year, posting mixed results impacted by the decline of its wholesale WiMAX business and concerns over funding for its future LTE plans.
Highlighting the dwindling business from its wholesale operations, Clearwire said it lost 162,000 total customers during the latest quarter, down significantly from the 586,000 customers it added during the first quarter of 2012. The drop was solely on the back of its wholesale services, which saw net additions fall from a gain of 537,000 customers last year to a loss of 270,000 customers this year. Clearwire did manage to double the number of customers added through its direct channels, adding 108,000 customers during the first quarter of 2013.
Analysts noted the wholesale drop was due to parent company Sprint Nextel curtailing the sale of WiMAX-enabled devices that run across Clearwire’s network. Sprint Nextel has begun to change the focus of its “4G” marketing to its own LTE network.
Clearwire reported that it has lost more than 1.5 million customers over the past 12 months with all of those losses coming from its wholesale operations.
Customer retention challenges were also highlighted by increases in customer churn, spiking from 3% to 5.3% for its wholesale operations and from 3.7% to 4.2% for its retail operations compared with the first quarter of 2012.
Clearwire customers are also spending less per month, with the carrier reporting a $3.34 drop in average revenue per user year-over-year to $43.49 during the first quarter of 2013.
The drop in both its customer base and in ARPU impacted Clearwire’s bottom line as it posted a slight drop in total revenues, falling from $322 million during the first quarter of 2012 to $318 million this year. Clearwire explained that recent moves to optimize its retails sales channels have allowed the carrier to post a sequential increase in retail revenues.
The carrier also cut spending year-over-year, which helped improve its net losses from $421 million in 2012 to a loss of $304 million this year. Those spending cuts did not come from its capital expeditures budget, which managed to more than double year-over-year to $50 million during the first quarter of this year. However, Clearwire’s cash on hand had continued to fall, dropping from more than $1.4 billion at the end of Q1 2012, to less than $800 million this year.
Clearwire has been dipping into funds provided by Sprint Nextel as part of its attempt to acquire the remaining stake in Clearwire it does not currently control. However, that move has been slowed by competing offers by Dish Networks and Verizon Wireless that Clearwire said a “special committee” was continuing to evaluate.
Clearwire’s management did note that if the pending deal with Sprint Nextel should fall through, the company would lose access to $480 million in interim financing from Sprint Nextel that would force Clearwire to curtail spending and could result in the carrier running out of cash in early 2014. That warning would seem to not take into account the other pending offers that could see Clearwire gain significant funding from new sources.
That delay is also impacting Clearwire’s ability to move more aggressively with overlaying LTE technology across its network. Clearwire did explain that it remained on track to have 2,000 sites ready to connect to Sprint Nextel’s core by mid-year as part of a previously announced network arrangement and 5,000 sites by the end of 2013. The carrier had initially said it planned to have up to 8,000 LTE sites on air by mid-2013, but scaled back those plans late last year.
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