Following a December filled with changes to its business model in the wake of its forthcoming transition to LTE while continuing to support WiMax until its planned switchover, Clearwire has posted its preliminary fourth quarter 2011 financial results, which see slight improvements in terms of year to year revenue, immediate cashflow and operating profit but still have a long way to go before reaching a self sustaining level without relying on further debt sales, of which a new round of secured notes will be offered that will total $300 million. Read more for the breakdown.
Starting with quarterly revenues of approximately $362 million are estimated for fourth quarter 2011, representing a more than doubling of revenues from the fourth quarter of 2010. Retail revenues are estimated to be approximately $198 million and wholesale revenues are estimated to be approximately $164 million for the period, representing 1% and 20% sequential growth, respectively, over third quarter 2011 retail and wholesale revenues which were a marked change from the losses of the third quarter triggered by the continuing economic slowdown and then active expedition for outside funding to continue operations before the Fall 2011 debt sale.
Fourth quarter 2011 net wholesale subscriber additions are expected to total approximately 900,000 customers, resulting in approximately 9.1 million total wholesale subscribers, or 11% growth over third quarter 2011 wholesale subscriber numbers. Added to the approximately 1.3 million retail subscribers at the end of the year, the company expects total subscribers as of December 31, 2011 to be approximately 10.4 million, representing approximately 140% year over year growth in new subscribers.
Network usage by wholesale customers increased approximately 22% compared to third quarter 2011, driven primarily by growth in smartphone usage, which increased approximately 30% over the same period. Total 4G network usage by wholesale and retail customers increased 165% during 2011 compared to the same period in 2010. Clearwire has also estimated that cash on hand and cash equivalents and investments as of December 31, 2011 were approximately $1.11 billion compared to $711 million at September 30, 2011, an extensive increase from its previous holdings which were at risk of being depleted at the beginning of 2011.
Excluding net proceeds from the issuance of additional shares of $716 million and payment of $237 million interest on debt in December, cash utilized during fourth quarter 2011 was approximately $82 million, which is a marked improvement from the ~$100 million plus used in the third quarter before the aforementioned debt sale in the wake of being unable to find outside investment since the fourth quarter of 2010, when it was soliciting offers and seeking outside investment to continue day to day operations before former partner Sprint stepped up with lifelines to keep Clearwire running in the Fall.
With Clearwire’s August 2011 transition to a flat-rate model with no agreements, Clear WiMax service is helping to fund the company’s transition to LTE along with a new wholesale agreement reached with MVNO infrastructure provider Simplexity announced yesterday in order for Clearwire to make the process of reselling services to new wholesale customers easier, though the company will still handle direct wholesale transactions for those that prefer to have a direct connection to the company.
Clearwire is currently providing wholesale services to sprint for its lineup of WiMax devices, with Sprint transitioning to LTE beginning in the middle of the year and no new WiMax devices planned for release after the forthcoming launch of the Sierra Wireless Tri-Network Hotspot later this year ahead of Sprint’s LTE network launch. Clearwire will post complete results in the following weeks.