Clearwire sees strong Q4 on subscriber additions

Tue Jan 24, 2012 1:22pm EST

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(Reuters) - Clearwire Corp CLWR.O expects to double its fourth-quarter revenue as increasing smartphone adoption in the United States ticks up demand for the company's high-speed wireless services, putting it on track to report its first-ever positive EBITDA.

The company, which operates 4G WiMax infrastructure and sells its internet services mainly to Sprint Nextel (S.N), expects to add about 900,000 wholesale customers during the October-December period.

For the quarter, Clearwire expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive, compared with a loss of $46.45 million in the third quarter.

"It's definitely a plus that they are able to turn a positive EBITDA earlier-than-expected," Pacific Crest Securities analyst Steve Clement told Reuters.

The company expects to end the quarter with 9.1 million wholesale subscribers. Clearwire forecast total subscribers at December 31 to be about 10.4 million.

The company, majority owned by Sprint, projected quarterly revenue of about $362 million. Analysts were expecting $355.3 million, according to Thomson Reuters I/B/E/S.

However, the company, which hasn't posted a profit yet, received a $1.6 billion lifeline from Sprint in December in the form of investment and order commitments.

It ended the quarter with $1.11 billion in cash and cash equivalents.

On Tuesday, Clearwire said its unit will offer $300 million in senior notes, as the company looks to expand its data services to LTE -- a high-speed wireless technology -- requiring further capital expenditure.

CHURN GOES UP

The company said wholesale churn -- a measure of customer attrition -- would shoot up to 2.9 percent, significantly higher than the 1.5 percent it reported last quarter.

Wells Fargo analyst Jennifer Fritzsche said the churn could partly be blamed on Apple's (AAPL.O) iPhone debut on Sprint's network.

"We believe some of these WiMAX users may have switched to the iPhone."

Sprint became the third U.S. carrier to officially launch Apple's flagship device in October after AT&T (T.N) and Verizon (VZ.N). However, Sprint customers upgrading to the iPhone would have cancelled their 4G services since the device only supports GSM 3G.

Shares of Clearwire rose 6 percent to $1.86 on Tuesday on the Nasdaq. They have gained over 40 percent in value since touching a low of $1.24 in October last year after possibilities of the company defaulting on its debt emerged.

(Reporting by Himank Sharma in Bangalore; Editing by Maju Samuel)

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