* Total Net Subscriber Additions of 283,000 - Greater than Full Year 2009
* Wholesale Subscriber Base Triples During the First Quarter 2010
* First Quarter Revenue of $107 Million - Up 72% Year Over Year
* Company Surpasses 50 million People Covered By Its Networks
* 4G WiMAX Smartphones By Samsung and HTC Expected to be Available Before End of 2010
KIRKLAND, Wash. --Clearwire Corporation (NASDAQ: CLWR), a leading provider of wireless broadband services, reported its unaudited condensed consolidated financial and operating results for the first quarter of 2010.
"Customer demand for 4G services is truly making 2010 the year of mobile broadband, as always-on true mobile broadband keeps people connected to the information, services and applications that matter most," said Bill Morrow, CEO of Clearwire. "With record breaking subscriber growth, a robust wholesale 'network of networks' approach to 4G, and customer usage that far surpasses anything seen on 3G networks today, Clearwire is standing at the forefront of the next evolution in telecommunications and technology."
Clearwire ended the first quarter with 971,000 total subscribers consisting of 814,000 retail subscribers and 157,000 wholesale subscribers. During the first quarter 2010 Clearwire added 283,000 net new subscriber additions including 172,000 retail additions and 111,000 wholesale additions. Greater than one-third of our wholesale subscribers consist of subscribers on dual mode devices that reside outside of our currently launched markets, but for whom we receive monthly recurring revenue.
Revenue for the first quarter 2010 was $106.7 million, a 72% increase over first quarter 2009 revenue of $62.1 million and a 33% increase over fourth quarter 2009 revenue of $79.9 million. Retail average revenue per subscriber (ARPU) was $42.77 in the first quarter 2010. Retail ARPU in the first quarter includes the positive impact of $1.22 related to a prior period adjustment to account for incentive discounts over the lives of customer contracts. Without this adjustment first quarter ARPU was $41.55.
Retail cost per gross subscriber addition (CPGA) improved to $439 in the first quarter 2010, down from $624 in the fourth quarter 2009. The decline in CPGA is largely a function of greater gross additions, better overall marketing efficiencies and fewer market launches.
Retail monthly churn also improved to 3.0% in the first quarter 2010 compared to 3.6% in fourth quarter 2009. During the first quarter, the Company completed the conversion of the Hawaii, Seattle and Carolina markets to its 4G network, and the subscriber churn rate in the non-conversion markets was 2.7%.
The first quarter 2010 net loss attributable to Clearwire was ($94.1) million, or ($0.47) per basic share, as compared with the fourth quarter 2009 net loss attributable to Clearwire of ($98.7) million, or ($0.55) per basic share. The first quarter 2009 net loss attributable to Clearwire was ($71.1) million or ($0.37) per basic share.
The first quarter 2010 adjusted earnings before interest, taxes, depreciation and amortization and non-cash expenses related to capital assets (adjusted EBITDA) loss was ($251.6) million, an improvement from fourth quarter 2009 adjusted EBITDA loss of ($295.7) million. The adjusted EBITDA loss for the first quarter 2009 was ($144.0) million.
2010 Business Outlook
Clearwire continues to expect to cover up to 120 million people with its 4G network by the end of 2010. Within this footprint, services will be offered under both the CLEAR(R) brand name, and those of the Company's strategic wholesale providers which will vary across individual markets.
The Company also continues to expect that total subscriber levels will triple in 2010 from the end of 2009 levels and that it will end 2010 with more than 2 million total subscribers. The Company expects average 2010 retail CPGA to be in the mid $500's and consistent with the average CPGA for 2009, while average retail ARPU is now expected to remain above $41.00 for 2010.
The timing and extent of our future plans are subject to a number of conditions, including the performance in our launched markets and access to additional funding. The Company currently expects to have full year 2010 net cash utilization between $2.8 billion and $3.2 billion.
In recent weeks, the Company has expanded its 4G mobile broadband network service area with five new markets covering nearly five million people, including Houston, TX in March, and earlier this week in Harrisburg, Reading, Lancaster and York, PA.
Clearwire also today announced plans to launch 4G mobile broadband service in 19 additional cities this summer, including previously announced markets Kansas City, KS; St. Louis, MO; Salt Lake City, UT, and the core area of Washington, D.C. and newly announced markets Nashville, TN; Daytona, Orlando and Tampa, FL; Rochester and Syracuse, NY; Merced, Modesto, Stockton, and Visalia, CA; Wilmington, DE; Grand Rapids, MI; Eugene, OR; and Yakima and Tri-Cities, WA.
In addition, the Company reiterated its plans to launch Clearwire's 4G network in other major markets across the country by the end of 2010, including New York City, Los Angeles, Boston, Denver, Minneapolis, the San Francisco Bay Area, Miami, Cincinnati, Cleveland and Pittsburgh.
The Company also expects to launch two WiMAX smartphones by the end of 2010. From Samsung, an Android-based 3G/4G/WiFi device optimized for heavy video and video communications use, and a 3G/4G/WiFi enabled phone from HTC.
Other Results of Operations
Cost of goods and services and network costs for the first quarter, 2010 increased 96% to $144.6 million compared to $73.6 million for the first quarter 2009. This increase is due to increased tower lease and backhaul expenses resulting from the launch of 4G markets.
Selling, General and Administrative (SG&A) expense for the first quarter 2010 increased 106% to $223.8 million compared to $108.5 million for the first quarter 2009. The increase is primarily due to higher sales and marketing and customer care expenses in support of the launch of new markets, as well as additional resources, headcount and shared services that we have utilized as we continue to build and launch our 4G markets. Employee headcount at March 31, 2010 increased to approximately 3,595 compared to 2,015 employees at March 31, 2009.
Higher network expansion activities led to an increase in Capital Expenditures (CapEx) to $690 million in the first quarter 2010 from CapEx of $112 million for the first quarter 2009. Net cash spending, including operating activities, capital expenditures and spectrum purchases; net of proceeds from financing activities, was $842 million. We ended the first quarter of 2010 with cash and investments of approximately $3.1 billion invested primarily in U.S. Treasury securities.
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