Clearwire posts increased loss on market expansion

Wireless broadband service provider Clearwire Corp.’s losses widened substantially during the third quarter, with higher revenues more than offset by a $159 million charge related to the refinancing of some of Clearwire’s debt.
The company reported a net loss of nearly $185 million for the quarter, up from a loss of about $14 million in the prior year’s third quarter. Besides the refinancing charge, other contributors to the loss included about $14 million in “realized investment losses due to other-than-temporary impairments in Clearwire’s investment portfolio due primarily to exposure in auction rate securities,” according to the company.
Clearwire’s adjusted earnings before interest, taxes, depreciation and amortization came in at a loss of $84.1 million, way up from the EBITDA losses of $23.3 million in the third quarter of 2006. The company said that the adjusted EBITDA losses were “driven primarily by Clearwire’s ongoing investment in the construction and deployment of wireless networks in new markets, associated market launch costs and increased total subscriber acquisition costs related to the additional markets.”
Clearwire gained 49,000 customers during the quarter-up from 33,000 net additions during the year-ago period-to end with a subscriber base of 348,000 customers. That figure reflects 115% growth-year-over-year, and sequential growth of 16%. The company launched five new markets during the quarter: Corpus Christi, Texas; Syracuse, N.Y.; Dayton, Ohio; Nashville, Tenn.; and Seville, Spain.
Company executives said during a call with analysts that development of some new markets had been put on hold as Clearwire negotiated with Sprint Nextel Corp. on the terms of a partnership to accelerate the deployment of WiMAX-however, the Sprint Nextel-Clearwire deal has fallen apart so those markets will be delayed. The two companies say they are still in discussions on how to work together on the deployment of a WiMAX network, but it’s possible no partnership will materialize.
Clearwire’s average revenue per user was $37.41, up from $35.46 in the year-ago quarter, and its churn decreased slightly year-over-year from 2.4% to 2.3%.
Clearwire’s network now extends to nearly 15 million potential customers.