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WIKI ANALYSIS
Clearwire (CLWR) is a wireless broadband service and equipment provider worldwide, including high-speed Internet connection as well as VOIP. [1][2] The company caters mostly to individuals and small businesses.[3] At this point, the company is still not yet profitable. However, Clearwire expects to grow explosively with the onset of WiMAX technology.[4]
Clearwire's 4G mobile broadband networks creates a communications channel into the home or office, and also provides a broadband connection anywhere within its coverage area. As of December 31, 2009, the Company operated in 61 markets in the United States and Europe.[5] It had approximately 642,000 retail and 46,000 wholesale subscribers.[5] Clearwire’s service WiMAX, referred as 4G mobile broadband services, offer the services both on a retail basis and through the wholesale partners, including Sprint, Comcast, Time Warner Cable and Bright House.[5] During 2009, Clearwire operated 4G mobile broadband networks in 27 of the markets in the United States. These markets include, among others, Atlanta, Baltimore, Charlotte, Chicago, Dallas, Honolulu, Las Vegas, Philadelphia, Portland, Oregon, San Antonio and Seattle.[5]
Clearwire Communications has three primary domestic operating subsidiaries that are wholly-owned: Clear Wireless LLC, which operates its all of the 4G mobile markets; Clearwire US LLC, which operates legacy domestic markets and markets that have been converted from pre-4G technology to mobile WiMAX technology, and Clear Wireless Broadband LLC, which operates the 4G mobile broadband market in Baltimore, Maryland.[5]
Company Overview
Business and Financial Metrics
First Quarter 2010 Results[6]
Clearwire ended the first quarter with 971,000 total subscribers consisting of 814,000 retail subscribers and 157,000 wholesale subscribers. During the first quarter 2010 Clearwire added 283,000 net new subscriber additions including 172,000 retail additions and 111,000 wholesale additions. Greater than one-third of its wholesale subscribers consisted of subscribers on dual mode devices that reside outside of the company's currently launched markets, but for whom Clearwire receives monthly recurring revenue.
Revenue for the first quarter 2010 was $106.7 million, a 72% increase over first quarter 2009 revenue of $62.1 million and a 33% increase over fourth quarter 2009 revenue of $79.9 million. Retail average revenue per subscriber (ARPU) was $42.77 in the first quarter 2010. Retail ARPU in the first quarter includes the positive impact of $1.22 related to a prior period adjustment to account for incentive discounts over the lives of customer contracts. Without this adjustment first quarter ARPU was $41.55.
Retail cost per gross subscriber addition (CPGA) improved to $439 in the first quarter 2010, down from $624 in the fourth quarter 2009. The decline in CPGA is largely a function of greater gross additions, better overall marketing efficiencies and fewer market launches.
Retail monthly churn also improved to 3.0% in the first quarter 2010 compared to 3.6% in fourth quarter 2009. During the first quarter, the Company completed the conversion of the Hawaii, Seattle and Carolina markets to its 4G network, and the subscriber churn rate in the non-conversion markets was 2.7%.
The first quarter 2010 net loss attributable to Clearwire was ($94.1) million, or ($0.47) per basic share, as compared with the fourth quarter 2009 net loss attributable to Clearwire of ($98.7) million, or ($0.55) per basic share. The first quarter 2009 net loss attributable to Clearwire was ($71.1) million or ($0.37) per basic share.
The first quarter 2010 adjusted earnings before interest, taxes, depreciation and amortization and non-cash expenses related to capital assets (adjusted EBITDA) loss was ($251.6) million, an improvement from fourth quarter 2009 adjusted EBITDA loss of ($295.7) million. The adjusted EBITDA loss for the first quarter 2009 was ($144.0) million.
Business Segments[5]
CLEAR Mobile Broadband Services
During 2009, Clearwire offered CLEAR branded retail services over the 4G mobile broadband networks in 27 markets. It offers the CLEAR subscribers day passes, service contract and no-contract plans, and bundled services. Its mobile plans consist of a daily pass for a fixed fee, limited use monthly plans where subscribers purchase a specified amount of data usage for a fixed price and unlimited monthly plans that do not limit the amount of data usage. The business services offer, also include faster upload speeds for a fixed Internet access service and plans that bundle multiple mobile subscriptions. Additionally, Clearwire offers bundled packages that allow subscribers to pick and choose from among the mobile and residential plans, as well as its voice over Internet protocol (VoIP) telephony service, enabling them to access the Internet when and where they need it.
The Company offered a service plan that provides subscribers with unlimited local and long distance calling, including calls within the United States, Canada, and Puerto Rico, for a fixed monthly fee, with various promotional discounts available. The VoIP service can also be purchased in a bundled offering with other services. The VoIP telephony service package includes calling features, such as voice mail, call waiting, 3-way calling and caller identification (ID). Its service is also E911 compliant and offers number portability. In addition, its VoIP subscribers can set a range of telephony options online, such as call forwarding and call blocking. The subscribers generally make their payments through an automatic charge to a credit or debit card or bank account.
Trends and Forces
Move to 3g Networks
With current wireless networks overburdened, 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: Clearwire offers broader coverage, on the order of miles, as well as higher bandwidth, 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.[7]
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 in 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. [8]
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.[9]
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.[10] 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. [11]
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
- ↑ 5.0 5.1 5.2 5.3 5.4 5.5 Reuters: Clearwire
- ↑ "Clearwire Reports Strong First Quarter 2010 Results"
- ↑ 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
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