Clearwire is celebrating a good first quarter, reporting net adds of 283,000 – more than analysts expected and more than it added during the entire year of 2009 – and says it plans to offer two smartphones, one by Samsung and another from HTC, before the end of this year.
In a conference call with analysts, Clearwire CEO Bill Morrow said the company has a lot of work in front of it, but executives believe they’re in the right place at the right time with a healthy spectrum position as mobile Internet penetration ramps up.
The mobile WiMAX service provider ended the first quarter with 971,000 total subscribers consisting of 814,000 retail and 157,000 wholesale. The 283,000 net adds include 172,000 retail and 111,000 wholesale additions.
Executives did not release a lot of details about the new smartphones coming later this year except to say the devices will be based on Android. Chief Commercial Officer Mike Sievert explained that initially, it makes sense to base the voice calling portion of the phones on cellular, but customers already use VoIP calling apps like Skype to conduct phone calls using Clearwire’s WiMAX service.
Interestingly, Morrow noted that some aspects of Clearwire’s working agreements with Intel have been changed or updated. One clause calls for Clearwire to commercially focus only on WiMAX through 2012, but now either party can terminate that part at any time with 30 days notice, so Clearwire, in the spirit of being technology agnostic, could add LTE into the mix. The company hasn’t made a decision to do that, but it wanted to keep its options open, Sievert explained in an interview. The two remain close collaborators and plan on bringing WiMAX notebooks and netbooks to market with a collaboration with Best Buy.
Sievert said he’s often asked: What’s the killer app? And it runs the gamut from higher definition video to low latency gaming, but “everything works better,” he said, compared to 3G. In fact, the average mobile user on Clearwire exceeds 7 gigabytes, which is more than the cap on some competitors’ 3G plans.
While Clearwire customers come from all walks of life, three big segments stand out, according to Sievert. One is the growing base of customers under 30 who live in urban environments and it’s often their only Internet connection. Another segment is small businesses with employees that move around the city, such as contractors, real estate agents or plumbers, or people who have several offices or retail outlets in an area. A third is suburban families, a lot of whom have a wired connection but they want the flexibility of what’s essentially a giant mobile hot spot without the need of searching for Wi-Fi hot spots.
More than one-third of Clearwire’s wholesale subscribers consist of subscribers on dual-mode devices that reside outside of its currently launched markets, but for whom the company receives monthly recurring revenue. They could be people who are waiting for 4G to arrive in their home markets or they use 4G in areas where they travel.
As it continues to add more markets, the company expects to have 2 million customers by the end of this year. Plans call for launching in additional cities this summer, with more slated for later in the year.
Here are some more numbers released in Clearwire’s first-quarter results:
- The company’s net loss was $94.1 million, or 47 cents per basic share, compared with a fourth-quarter net loss of $98.7 million.
- Revenue for the first quarter 2010 was $106.7 million.
- Retail ARPU was $42.77 and retail cost per gross addition (CPGA) improved to $439, down from $624 in the fourth quarter.
- Retail monthly churn was 3 percent in the first quarter. During the quarter, the company converted Hawaii, Seattle and Carolina markets over to its 4G network, and subscriber churn in the non-conversion markets was 2.7 percent.
Clearwire shares, at around $7.56, were up more than 3 percent in after-hours trading.