Clearwire Cuts as It Hunts for Funding
The operator’s CEO, Bill Morrow, discussed the “hurdles” that the company will have to overcome on its third-quarter conference call on Thursday evening. The aim is to cut between US$200 million and $400 million in spending by mid-2011 as the company looks for more sources of funding.
The company “continues to have discussions with both existing and new players” on equity funding, Morrow says. The firm is also looking at debt funding and a possible spectrum sale to raise cash. The board has formed a group to look at strategic alternatives.
In the meantime, as well as the workforce reduction, Clearwire is also cutting the number of contractors on its books and reducing spending on some retail deployments. This will mean, for instance, that it is delaying the launch of its own smartphones on the WiMax network.
Nonetheless, Clearwire is now growing its subscriber base with its wholesale partners, including Sprint Corp. (NYSE: S), as it grows its WiMax network in the US. During the third quarter, Clearwire added 1.23 million total net new subscribers, including 150,000 retail additions and 1.1 million wholesale additions, so that it now has 2.84 million subscribers, although around 45 percent of the wholesale users currently live outside of the operator’s launched markets.
The company reported a net loss of $139.4 million for the quarter on revenue of $147 million, a 114 percent increase over third-quarter 2009 revenue of $68.8 million. Clearwire says its domestic WiMax network now reaches areas of the US where approximately 100 million people live, which includes areas not yet commercially launched.
CEO Morrow says that the operator has now reached a “unique inflection point in the company’s history.” He says that he is “confident” that the operator will get the funding it needs to overcome its cash crunch.
— Dan Jones, Site Editor, Light Reading Mobile