Clearwire Gains Subscribers, Remains in the Red

Clearwire gained 1.5 million subscribers in the fourth quarter of 2010 and more than doubled its revenue, but lost US$128 million, the mobile WiMax operator announced on Thursday.

The company ended the year with 4.4 million subscribers, up from 688,000 a year earlier. About 1.1 million of those were customers of Clearwire’s own retail service, called Clear, while 3.3 million bought service on the WiMax network through partners such as Sprint Nextel and Comcast. The company collects far less revenue from wholesale than from retail subscribers and has previously disclosed disputes with Sprint over that revenue. In its financial press release Thursday, Clearwire said it believes a settlement of those issues with Sprint is imminent.

Because the company is focused on conserving cash, its plans for a branded smartphone remain on hold, executives said during a conference call after the report. Clearwire plans only modest network expansion this year, but it does aim to double its subscriber base to 8.8 million by the beginning of 2012, they said.

Clearwire has had discussions with several parties interested in acquiring some of the company’s spectrum, making a strategic investment, or both, CEO Bill Morrow said. It would prefer strictly a strategic investment. The company has put off a decision on those offers in order to focus on resolving the wholesale revenue dispute, but it plans to announce a decision in the second quarter, Morrow said.

The quarterly report came amid indications that Sprint, the majority owner of Clearwire and the most important reseller of its 4G services, may be planning to build a 4G network of its own using LTE (Long Term Evolution). Clearwire has tested LTE itself and hinted it might deploy the technology in addition to WiMax, but recent comments by Sprint’s networks chief indicated that Sprint is interested in going it alone.

Morrow downplayed suggestions of a rift, saying he talks frequently with Sprint CEO Dan Hesse.

“The relationship is healthy and strong,” Morrow said. “We’re working very well together, and we share a common vision for the future.” If Sprint does embark on a network expansion apart from Clearwire, it will not affect the relationship between the carriers, he said.

Meanwhile, Clearwire is working with silicon vendors to promote development of multimode chipsets that could work with both WiMax and LTE. Clearwire expects handsets with such capabilities to be on the market by the end of this year. Some observers believe T-Mobile USA may be interested in becoming a wholesale partner of Clearwire and/or buying some of its excess spectrum.

Clearwire said its network now reaches 119 million potential subscribers around the U.S., nearly meeting the company’s target of 120 million by the end of 2010. Clearwire has been struggling to continue the expansion of its network while losing money. After its third-quarter report, the company announced it would lay off 15 percent of its staff, delay the introduction of its first branded smartphone, and cut back marketing and advertising efforts, among other cost-cutting steps. Those moves came even after Clearwire had reported nearly a doubling in subscribers and a 114 percent gain in revenue.

Despite that third-quarter growth, Clearwire lost $139 million in the quarter. The company raised about $1.4 billion through a debt offering in early December but kept its austerity measures in place.

The carrier expects its network to cover 130 million people in the U.S. by the middle of this year, with further expansion dependent on raising more capital. The buildouts will occur mostly in rural areas, partly because of the requirements of its spectrum licenses, but the company said it may also add some capacity in large cities as needed.

Clearwire expects to achieve positive EBITDA (earnings before interest, taxes, depreciation and amortization) in 2012, it said.

The financial report was the first for Clearwire under its new chairman, John Stanton, who was elected by the company’s board of directors in January. He succeeded Craig McCaw, who founded the original Clearwire wireless broadband company.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen’s e-mail address is stephen_lawson@idg.com