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May 6, 2010

Clearwire Wireless Broadband Inc. posted strong first quarter results that are highlighted by company record customer growth.

Clearwire said it added 283,000 new customers to its network during the first quarter, including 173,000 direct additions to its Clear-branded service and 110,960 through its wholesale partners Sprint Nextel, Comcast and Time Warner Cable.

The growth pushed the company’s total customer base to 971,100 customers, which included 814,200 direct customers and 157,050 customers added through its network partners.

The strong quarterly growth was a significant improvement compared with the 25,000 customers it added during the first quarter of last year and 87,000 subscribers it added during the fourth quarter of 2009.

Revenues for the first quarter increased 72.1 percent year-over-year to $107 million, and were a 32.9 percent increase compared with the $80 million Clearwire reported for the fourth quarter of 2009.

The increase was driven by customer growth as well as an increase in ARPU (average revenue per user) to $42.77.

One interesting note from its customer growth results were that one-third of net additions through its wholesale partners came from markets where the wireless carrier didn't yet offer its 4G service, with customers in those markets presumably taking advantage of dual-mode devices that offered support for Sprint Nextel’s CDMA2000 1x EV-DO Revision A-based network.

Clearwire’s management said yesterday that this was beneficial as the company is seeking a soon-to-launch market with WiMAX-capable devices and bringing in revenues prior to an official launch.

But along with the increased revenues came an increase in operating expenses related to its market build outs that pushed Clearwire’s net losses up 32.2 percent sequentially from a loss of $71 million during the fourth quarter of last year to a loss of $94.3 million during the first quarter of 2010.

Clearwire’s management said it expected the losses to continue through the rest of this year due to its aggressive market launch plans.

Clearwire also reported that its total headcount had increased from 2,014 employees at the end of the first quarter of last year to almost 3,590 employees in 2010.

It expected that number to continue to grow this year in support of its network launches, but also said that most of that growth would come at the market level and not in its executive or management ranks.

Clearwire recently amended an agreement with Intel that will allow either party to provide 30 days notice before exiting their current agreement that requires Clearwire to continue exclusive use of WiMAX technology on its network through early 2012.

The agreement was originally part of Intel’s 2008 investment into Clearwire in support of Intel’s plans to build up the burgeoning WiMAX chip market.

This amendment would seem to open the door for Clearwire to follow up on its proclamation of being “technology neutral” and move forward with plans to install an LTE-based technology on its network.

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Source: Clearwire Wireless.