Clearwire Expects Higher 4Q Revenues as Smartphone Usage Rises

With a sharp rise in smartphone usage around the country, Internet service and 4G WiMAX infrastructure provider Clearwire Corp. is expecting to double its revenues in the fourth-quarter (4Q). The increase in revenue is also attributed to the company's growth in high-speed wireless services.

According to a report by the International news agency Reuters, Clearwire expects to add about 900,000 wholesale customers during the October-December period. As per this report, the company expects 4Q adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive, compared to a loss of $46.45 million in the third quarter (3Q).

Pacific Crest Securities analyst Steve Clement told Reuters, "It's definitely a plus that they are able to turn a positive EBITDA earlier-than-expected." Reuters reporter Himank Sharma wrote that “the company expects to end the quarter with 9.1 million wholesale subscribers.” However, earlier Clearwire had indicated that its wholesale subscribers would increase to around 10.4 million by the end of December 2011, wrote Sharma.

Meanwhile, majority owner Sprint had projected a quarterly revenue of about $362 million, while analysts were expecting $355.3 million, according to Reuters I/B/E/S, wrote Sharma. Nevertheless, Clearwire received a $1.6 billion lifeline from Sprint in December in the form of investment and order commitments, according to Reuters. As a result, the company ended the fourth quarter with $1.11 billion in cash and cash equivalents, Sharma wrote.

Concurrently, as per the Reuters report, Clearwire stated that wholesale churn, a measure of customer attrition, would go up to 2.9 percent, significantly higher than the 1.5 percent reported in the last quarter. According to Wells Fargo analyst Jennifer Fritzsche, “The churn could partly be blamed on Apple's iPhone debut on Sprint's network,” wrote Sharma.

Per Sharma’s report, Sprint became the third U.S. carrier to officially launch Apple's flagship product in October soon after AT&T and Verizon introduced iPhones on their respective 4G networks.

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