Clearwire posted its first-quarter earnings yesterday with a team of new executives: COO Erik Prusch, CFO Hope Cochran, and Chairman/interim CEO John Stanton. (For more on management changes, click here).
The next-gen carrier reported “record” subscriber growth for its 1Q11, adding 1.8 million new users, consisting of 1.6 million new wholesale subscribers and 155,000 retail subscribers. The first quarter ended with 6.1 million total subs.
"We now expect to finish 2011 with approximately 9.5 million subscribers," said Prusch, adding the wireless carrier plans to pace its retail growth during the rest of the year, focusing on its more profitable channels like Web, telesales and other low-cost retailers.
"During the quarter, we expanded our 4G coverage to 126 million total domestic POPs, primarily by building certain suburban and rural areas to satisfy SEC license requirements," Prusch noted. "As of today, our 4G network covers approximately 130 million POPs, including two-thirds of the population of the top 100 U.S. markets."
Clearwire recently announced a new wholesale agreement with Sprint, its largest customer and its largest shareholder (For more, see Clearwire Garners $1B Payment Promise From Sprint, But What’s Next?). On yesterday’s call, Stanton said, "On Sprint, I believe that our team’s strong relationships with Sprint executives have enabled us to substantially strengthen our business partnership with their company over the last several months. We are now in discussions with Sprint regarding our role in their network modernization.”
He continued, “We believe that we have the spectrum in urban areas that they need to fulfill their promises to their customers and to differentiate them from their competitors. We expect to grow our footprint and evolve our technology based on our close relationship with Sprint and our other partners as we continue to seek new funding to fuel our growth."
As far as spectrum goes, Cochran added, "We recognize the strategic advantage of our spectrum holdings. In the past, we talked about the option of selling excess spectrum and that we have received bids from multiple parties. The AT&T and T-Mobile deal demonstrates the enormous value of our spectrum position. With the near-term capital needs of our current business now satisfied, we will be extremely judicious with our spectrum assets."
Cochran reported improved financials, with an increase in pro forma 1Q11 revenues of $258.1 million, up 142 percent from $106.7 million (YoY); this increase did not include the new arrangement with Sprint. Taking the Sprint deal into consideration, she said Clearwire expects wholesale revenue to double between 1Q11 and 4Q11.
Explaining Clearwire’s big-picture strategy, Stanton said, "We have four simple goals: first, drive wholesale revenue growth, particularly by working closely with Sprint and our cable partners; second, optimize the retail channel and generate double-digit retail subscriber and revenue growth this year; third, cut costs; and fourth, develop and implement a long-term technology and funding plan."