Clearwire nixes majority of backhaul agreements with FiberTower

Wireless backhaul provider FiberTower Corp. (FTWR) said it received its second early termination notice from Clearwire Corp. (CLWR) to discontinue service effective April 30, 2011. The termination represents approximately $434,000 in monthly service revenue, though FiberTower noted that the early termination fee for the discontinued service would be approximately $1.9 million payable immediately.
FiberTower noted that despite the termination, Clearwire is maintaining services accounting for approximately $80,000 in monthly revenues, or about 16% of the total service revenue that had been billed to Clearwire on a monthly basis. FiberTower added that it had previously adjusted its 2011 operating and capital plans in anticipation of the event and that it believes “it has sufficient liquidity to support its business through 2011 and remains focused on prudent management of its cash balance and capital outlays, and continues to explore alternatives to position the company to participate on a larger scale in the growth of wireless backhaul.”
FiberTower operates in 13 major markets and has service agreement with nine U.S.-based wireless carriers. The company’s stock was trading at a 52-week low down more than 11% early Monday at $1.20 per share.
Clearwire has relied heavily on wireless backhaul for its WiMAX-based mobile broadband network. The company has recently been dealing with financial constraints and noted late last year that it was looking to conserve cash that would include the slowing down of its network build plans. Clearwire ended 2010 with a network covering approximately 119 million potential customers with plans to push that to around 130 million by the end of the year. Most of that growth is expected to come from “organic” expansion in markets where it has already launched services, with further expansion predicated on tapping into more cash.