By Maisie Ramsay
Friday, March 6, 2009
Troubled mobile WiMAX startup Clearwire announced it would burn through $1.5 billion to $1.9 billion in 2009 to build out its network, defying widespread speculation that the company lacked the capital resources for a swift deployment.
“Despite the economic downturn, I firmly believe that Clearwire is in the right place at the right time,” said CEO Ben Wolff in a conference call. “The fact is that wireless communications continue to be an incredible opportunity for growth in our country, and now the growth in the wireless industry has shifted almost entirely to data services.”
The company says it will expand its mobile WiMAX network to cover 120 million people in 80 markets in 2010, a slightly lower prediction from last year’s forecast of 140 million.
Clearwire plans to launch service in Las Vegas and Atlanta this summer, adding over 4.5 million people to the company’s coverage footprint. It also will launch in prominent markets such as Chicago, Philadelphia and Dallas-Forth Worth. Network upgrades will happen in other markets, including Seattle, Honolulu and Charlotte. 2010 target markets include New York, Boston, Washington, D.C., and the San Francisco Bay area.
Still, the slowed expansion is giving Verizon Wireless’ rival LTE technology some time to catch up. The telecom giant plans to go live with its network by the end of 2009, though nationwide deployment is several years out. LTE recently gained steam at the Mobile World Congress and is poised to become the dominant 4G technology in the United States thanks to the backing of major players like Verizon and AT&T.
Clearwire’s stock has plunged 40 percent in the past three months, triggering a clause that gave its big-name investors an increased stake in the company. Google alone got an additional 4.4 million shares.
The plunge in the company’s stock price has also forced investors Comcast, Intel, Google and Time Warner to take hefty impairment charges.
Clearwire has continued to hemorrhage cash as high capital expenditures outpaced a 21 percent hike in subscribers and a 6 percent rise in ARPU. The company posted a net loss of $118 million, or 28 cents per share, compared to last year’s loss of $108.3 million. The company’s subscriber base grew to 475,000 from 394,000 last year. ARPU came in at $39.70, compared to $36.09 in the year-earlier period. Churn rose to 2.8 percent from 2.4 percent last year.
For the full year, the company lost $432.6 million, compared to $224.7 million last year. The company reported sales of $20.49 million.
Though operating losses climbed to $493 million, from $212 million last year, Clearwire’s assets almost tripled as the company continued to build out its network. The company had $9.12 billion in assets by the end of 2008 compared to $3.14 billion last year.