KIRKLAND, Wash.--(BUSINESS WIRE)--Clearwire Corporation (NASDAQ:CLWR) (along with its subsidiaries, "Clearwire" or the "Company"), a leading provider of wireless broadband services, today reported its unaudited consolidated financial and operating results for the fourth quarter and full year ended December 31, 2008.
Among the 2008 highlights, the company reports that it:
Completed Combination with Sprint's 4G Assets, Resulting in Largest U.S. Mobile Wireless Spectrum Portfolio
Closed $3.2 Billion Financing Round at $17 Per Share
- 2008 Pro Forma Revenue Increases 52 Percent Driven by 21% Subscriber Growth and 6 Percent ARPU Increase
Initial Markets Increase Market EBITDA Margin to 40 Percent in Fourth Quarter 2008
First "Clear" Mobile WiMAX Market Comes Out of the Gate Strong With
Initial Sales More Than Double Any of Clearwire's Prior 47 Market
- Mobile WiMAX Network Expansion Under Way Enabling Coverage of Up To 120 Million Americans Across 80 Markets in 2010
Atlanta, Las Vegas, Chicago, Charlotte, Dallas/Ft. Worth, Honolulu,
Philadelphia, and Seattle Among Cities Going "Clear" in 2009
New York, Boston, Washington, D.C., Houston and the San Francisco Bay Area Lead List of Planned 2010 Launches
Clearwire to Launch Dual Mode 3G/4G Modem This Summer Giving "Clear" Subscribers Access to a Nationwide 3G Mobile Data Network
"In 2008, we accomplished very significant milestones throughout our business. We completed a transaction with Sprint Nextel that rationalized our spectrum holdings into a nationwide footprint and gave us access to Sprint's existing infrastructure to facilitate our network deployment. We raised more than $3 billion of new capital and entered into wholesale distribution arrangements with Sprint and leading cable companies, creating an expanded reach for our services well beyond what Clearwire could accomplish on its own," said Benjamin G. Wolff, chief executive officer of Clearwire. "We also continued to demonstrate the financial strength of our business and our ability to compete, with ARPUs increasing despite industry declines, and our U.S. markets as a group producing positive market EBITDA margins."
"During 2009, we expect to launch our Clear branded mobile broadband services in a number of new markets such as Las Vegas, Atlanta, Chicago, Philadelphia and Dallas/Ft. Worth and in our largest existing markets, namely Baltimore, Seattle, Honolulu and Charlotte," Wolff added. "With a robust pipeline of cell sites under development, we are working to significantly extend our wireless 4G network to many more markets, giving us the ability to cover as many as 120 million people with true broadband mobility by the end of 2010, including in major markets such as New York, Boston, Washington D.C., Houston and the San Francisco Bay area to name a few."
"In this difficult economic climate, our objective is to continue to balance the prudent use of our significant financial resources with our desire to take full advantage of the market opportunity that is in front of us, and we intend to do just that. This means retaining the flexibility to accelerate or decelerate our expansion based on our own successes and the macro economic environment. Our job is also to provide innovative products and services that give consumers more for less, which is more important than ever given the state of our economy. Our early results in Portland indicate we are doing just that," Wolff continued. "As we move into 2009, we are expanding our network to support the rapidly growing consumer appetite for 4G mobile broadband services. We firmly believe that we are in the right place at the right time, with an unmatched group of assets, enabling us to build long-term value for our shareholders as we re-invent the way people use, experience and connect to the Internet."
In addition to announcing network expansion plans, Clearwire also announced new products. The company expects to launch a dual-mode 3G/4G wireless modem in the summer giving Clear customers a national data footprint with Sprint's 3G network. The modem will be sold by Clear and Sprint and automatically switch between WiMAX service and Sprint's 3G network.
The company also plans to launch a personal hot spot, a Clear accessory which combines the mobility of WiMAX with the ubiquity of Wi-Fi. Expected to be available at the end of March, the device when paired with the Clear 4G service will open the Clear 4G network to hundreds of Wi-Fi enabled products.
As Clearwire is deploying a mobile WiMAX network, the PC industry is moving forward with WiMAX as well. Together with Intel, the technology now has a long list of supporters including Acer, Asus, Dell, Fujitsu, Lenovo, Panasonic, Samsung and Toshiba that are delivering new Centrino-2 processor powered notebooks with the integrated Intel WiMAX /Wi-Fi chipset that has advanced MIMO technology. There are 26 models that are WiMAX certified today and many more in the pipeline. A number of OEMs are also offering or plan to offer soon Intel Atom based netbooks, which increase the affordability and the reach of those products.
Clearwire expects there to be nearly 100 mobile WiMAX devices -- such as laptops, netbooks, handhelds, USBs and modems -- available to customers by the end of the year.
Clearwire's focus in 2009 and 2010 will be on development and expansion of its wireless 4G network. During this build-out phase, operating statistics will not be fully comparable to those in previous periods as the Company upgrades certain existing markets and launches new markets to extend the Clear mobile WiMAX network. Clearwire expects ARPU to be sustained over this period, but anticipates that Churn will increase in its pre-WiMAX markets as the Company transitions these networks to mobile WiMAX technology and that CPGA will increase as new markets are launched, consistent with Clearwire's past operating experiences.
Clearwire targets total net cash spend in the range of $1.5 to $1.9 billion for 2009. At this time, Clearwire is structuring new market development work to enable the Company to manage current cash resources into 2011, although this time period can be extended as it is driven largely by the pace of expansion. Clearwire is currently engaged in the development and construction of mobile WiMAX networks covering 75 million people, as well as the long lead time cell site development work necessary to cover an additional 45 million people, giving the Company the ability to cover 120 million people by the end of 2010. The ultimate timing of Clearwire's network build-out will largely be driven by the Company's market by market success and the availability of additional capital.
Clearwire's Initial Markets ended the fourth quarter of 2008 with approximately 223,000 subscribers on a pro forma basis. Pro forma Revenue for the Initial Markets increased by 13 percent to $26.9 million for the quarter, versus $23.7 million in the fourth quarter of 2007. Revenue growth was driven by 4 percent year-over-year growth in subscribers, as well as increased delivery of new products and services which drove the increase in ARPU to $39.56
Pro forma Gross Margin for the group of Initial Markets increased to 77 percent for the 2008 fourth quarter, versus a Gross Margin of 76 percent for fourth quarter of 2007. The Initial Markets posted a record Market EBITDA margin of 40 percent in the fourth quarter of 2008, a strong increase from the Market EBITDA margin of 11 percent for the group in the fourth quarter 2007. The Market EBITDA improvement resulted from Clearwire's consistent focus on containing SG&A expenses in the Initial Markets.
For the full year ended December 31, 2008, pro forma Revenue in the Initial Markets increased 23 percent to $105.7 million from $85.7 million in 2007. In addition pro forma Gross Margin in the Initial Markets for the year was 77 percent compared to 75 percent last year. Increased market level efficiencies and scale helped to significantly increase the Market EBITDA margin for the Initial Markets to 33 percent for the year, compared to 6 percent for 2007.
"2008 has also been a year in which we have achieved key financial milestones in our pre-WiMAX markets, which continue to demonstrate the long-term profitability and scalability of our business," added Wolff. "Over 75 percent of our 46 domestic pre-WiMAX operating markets closed the year posting positive Market EBITDA, and all of our U.S. markets as a group achieved a nearly 20 percent Market EBITDA margin after just turning Market EBITDA positive mid-year. Our Initial Markets posted a record high Market EBITDA margin of 40 percent in the fourth quarter just ended. We believe that these metrics bode well for the sustainability of Clearwire's business model as we deploy our 4G all-IP based network that provides increased efficiencies and a superior cost structure."
Headquartered in Kirkland, WA, Clearwire Corporation (NASDAQ:CLWR) offers a robust suite of advanced high-speed Internet services to consumers and businesses. The company is building the first, nationwide 4G mobile Internet wireless network, bringing together an unprecedented combination of speed and mobility. Clearwire's open all-IP network, combined with significant spectrum holdings, provides unmatched network capacity to deliver next-generation broadband access. Strategic investors include Intel Capital, Comcast, Sprint, Google, Time Warner Cable, and Bright House Networks. Clearwire currently provides mobile WiMAX-based service, to be branded Clear, in two markets and provides pre-WiMAX communications services in 50 markets across the U.S. and Europe.