Clearwire Corporation (CLWR): This Spectrum Rich Telecom Player Posts Lower Revenue

While Sprint is to gain spectrum from Clearwire, the former’s network overhaul made Clearwire lose subscribers and record a wider loss compared to last year. Let’s take a closer look at the latest financials of the spectrum-rich telecom player.

The quarter at a glance
Clearwire’s revenue fell 14% to $311 million and the net loss narrowed to $187.2 million from $236.8 million in the prior year. The drop in revenue was majorly due to the company’s contract with Sprint, which does not promote WiMax phones any further in favor of phones that run on the high speed LTE technology. This resulted in a drastic fall in wholesale revenue to $116.6 million, down 29% over last year’s figure. The subscriber base also fell 8% to a total of 9.6 million. The growth in the retail segment was more than compensated by the loss in the wholesale business. The company suffered a loss of as many as 915,000 wholesale net subscribers since Sprint ceased supporting Clearwire’s 3G WiMAX technology as it is shifting to 4G LTE.

The company’s cash position is critical as well. It closed the quarter with a cash balance of $869 million. This is primarily because of the huge capital expenditures that jumped to $102 million from $34 million in the prior year quarter. The unusual rise in capital expenditures is due to the company’s network overhaul program to shift from its WiMax service to 4G LTE. Sprint’s assistance at such a juncture is critical to the company’s ongoing network upgrading program.

To sum up
Where is Clearwire headed is a difficult question to answer. Should it join forces with its largest customer Sprint, as recommended by company directors? Or should it seriously think over Dish’s higher offer? The money losing carrier is soon going to experience a funding shortfall. It is therefore essential for the company to take an appropriate step quickly before its network upgrading program faces difficulty.

The article This Spectrum Rich Telecom Player Posts Lower Revenue originally appeared on Fool.com and is written by Rajesh Marwah.

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