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WIKI ANALYSIS
Clearwire (CLWR) is a relatively new wireless broadband service and equipment provider worldwide, including high-speed Internet connection as well as Voip. [1][2] They cater mostly to individuals and small businesses, and are present in 44 markets in the United States and 4 markets internationally.[3] At this point, the company is still not yet protifable, as this is their primary source of revenue. However, Clearwire expects to grow explosively with the onset of WiMAX technology.[4]
Business Financials
While the 2008 subscriber base of almost 400,000 is a 91% increase over the 2007 base, and revenues more than doubled,[5] the company is still not yet profitable. Clearwire is in search of funding for its ventures, and currently has only $1 billion - enough only to allow it to become a regional player in the broadband industries.[6]
Total subscribers have increased to approximately 555,000 (2009).
- Clearwire priced 920MM in debt near the end of 2009. This provides the company enough funds through at least 2010. This debt pricing was possible after Clearwire announced it had raised 1.56 BB in funding from previous investors (Sprint Nextel (S) et al).[7]
- On Dec 21, 2009 Clearwire Corp announced the commencement of a rights offering. The rights offering will grant each Class A common stock holder one transferable subscription right exercisable to purchase 0.4336 shares. If all of the rights are exercised Clearwire will have raised 361 MM to be used in the deployment of Clearwire's 4G mobile WiMAX network.[8]
- Revenues increased 13% as a result of an 18% in Subscriber growth. This can be explained by the increased coverage of the company's WiMAX network to over 30MM people and the 4G network coverage growth to over 10MM people.[9]
- 2009 spending will be ~1.9BB, a number within the projected range.
Business Segments
- Mobile WiMAX service: available in more than 25 markets and now covering over 30 MM people uses the 4G WiMAX network (named Clear) to offer speeds between 3-6Mbps.
- Pre-WiMAX service: Clearwire uses the Motorola (MOT) Licensed Point-to-Multi-point Expedience System to provide broadband service at indoor locations.
Trends and Forces
Move to 3g Networks
With current wireless networks becoming unsatisfactorily pokey, there is a huge demand for faster and more efficient networks. WiMAX is Clearwire's response to this trend. It is essentially a super-wifi network: Their is broader coverage, on the order of miles, as well as higher bandwith, on the order of Megabytes. Clearwire is the only company to be a pure WiMax bet. Analysts estimate that WiMAX revenues can exceed $10 billion by 2012.[10]
Telecommunication shift to 4G
The move towards 4G in the U.S. is becoming more and more evident. Sprint Nextel is moving towards it through Clearwire. Verizon Wireless will begin to unveil its 4G network mid 2010. AT&T (T) will also move to 4G in the next year though its 3G network can be upgraded to much faster speeds. [11]
WiMAX as an appealing market
Despite an almost universal 3G coverage in the U.S. WiMAX is being seen as a logical next step for a variety of companies. Companies like Intel (INTC) that financially support Clearwire have continued to develop WiMax products as planned. These products include next-generation Centrino chips for notebooks and silicon ultramobile PCs. Navini - a company that started focusing on WiMax in 2004 - was acquired by Cisco Systems (CSCO) in 2007. This indicates a shift towards the more powerful WiMAX network. Further, according to indsutry analysts the number of WiMAX users could reach 45MM by 2012.[12]
Partnerships and funding
Other companies interested in WiMAX include Intel, Motorola, SK Telecom, Google, Comcast, Best Buy, and Singapore Telecom may be interested in WiMax, but none of these companies have their future success pegged to the proliferation of WiMAX. Clearwire already has a profit-sharing agreement with Intel, which has committed to supporting WiMAX. Clearwire also has equipment purchasing agreements with Nextel and Motorola.[13] Clearwire is also in talks to partner with Sprint in order to fully develop the WiMAX network. However, neither company is well-funded,
Convergence of Internet, entertainment and telecommunication
With a growing demand for high speed internet, companies joining the WiMAX craze are finding new ways to expand the use of broadband connectivity to fuel their central business. Sprint Nextel hopes to use WiMAX to capitalize on its ownership of spectrum; cable companies like Comcast (CMCSA) are looking to attach WiMAX as additional packaged to provide broadband outside of the homes they already service; and Google (GOOG) hopes to use WiMAX as another platform for advertising. The underlying hope is that the telecommunication industry's subscriber base begins using a wider range of online services once they are provided with faster internet. [14]
Competition
Most current competitors are better established and have more resources.[15] However, Clearwire is the only pure play in WiMAX, so investment in this company is essentially a bet for WiMAX. Competition will have a negligible effect on Clearwire's long-term growth. The largest players in the WiMAX industry controlling 55% of the market are:
- Alvarion (ALVR) has a strong focus on wireless broadband.
- Motorola (MOT) (through Clearwire and NextNet). The most visible brand in the U.S. with the largest market share
- Aperto
- Soma
- Navini now Cisco Systems (CSCO)
Other players that are doing a considerable amount of research are Nokia and Alcatel. [16]
Internet Phone Service
Clearwire's Internet Phone Service uses Clearwire's high-speed Internet to provide unlimited local and long-distance calling from a regular phone. Unlike other VoIP providers Clearwire uses its own network which allows it to control sound and quality. The most notable competitors in this area are Vonage Holdings (VG) and SunRocket both of which has most of the market.[17]
References
- ↑ http://finance.yahoo.com/q/pr?s=CLWR
- ↑ CLWR 2008 10-Q, p.17
- ↑ CLWR 2007 10-Q, item 1, p.6
- ↑ CLWR 2008 8-K, p.6
- ↑ CLWR 2008 8-K, p.1
- ↑ Businessweek online, TECHNOLOGY, March 4, 2008
- ↑ Reuters Espana, Noticias, November 25, 2009
- ↑ Yahoo, Finance, December 21, 2009
- ↑ Clearwire, Investors, 2009
- ↑ Business Week, TECHNOLOGY, March 4,2008
- ↑ NYT, TECHNOLOGY, September 27,2009
- ↑ CNET, news, 2007
- ↑ CLWR 2008 10-Q, p.14
- ↑ NYT, TECHNOLOGY, May 7, 2008
- ↑ CLWR 2008 8-K, p.7
- ↑ International Conference WiMAX, January 10,2007
- ↑ VoIP News, Features, 2007
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