A week after the FCC approved Clearwire’s acquisition of Sprint’s WiMax business, the Kirkland, Wash.-based company released Q3 financial results today. In a release, Clearwire’s CEO Ben Wolff acknowledged the FCC approval, and said the merger is on target to close by the end of the year. “With unparalleled spectrum resources, next generation technology that is commercialized today, key distribution partners and substantial financing, we believe Clearwire (NSDQ: CLWR) will be set to unleash a new way to Internet by offering a true mobile broadband experience for our customers. We continue to make progress toward closing the transaction before the end of the year.” When the deal closes, Sprint (NYSE: S) will own 51 percent of the new company and Clearwire shareholders will retain about 27 percent. Google (NSDQ: GOOG), Intel (NSDQ: INTC) and a group of cable companies will invest more than $3.2 billion in the $14.6 billion venture to help fund the nationwide WiMax build-out.
Clearwire’s Q3 financial highlights: after the jump
– Revenues: The company’s revenues increased 47 percent to $60.8 million in Q3 versus $41.3 million for the same quarter of 2007. Clearwire added 8,000 subscribers during the quarter for a total of 469,000. The company is focused on upgrading its markets to mobile WiMax, rather than subscriber growth. In the nine-month period, revenues totaled $170.9 million. Last quarter, the company said it expects revenues for the year to range between $205 million to $215 million. Updated guidance was not provided this quarter.
– Net loss: Clearwire reported a net loss of $166.6 million, compared to a loss of $328.6 million for the same period in 2007. The 2007 period included a non-cash charge of $159.2 million related to extinguishingt of debt. The company also was able to narrow EBITDA, which reflected a loss of $72.9 million, versus an a loss of $84.1 million for the same period in 2007. This was due to a significant decrease in selling, general and administrative expenses, which is consistent with the company’s focus on moderating sales and marketing spending and subscriber growth in order to direct its resources toward developing new mobile WiMAX markets.
— ARPU and Churn: The company’s average revenue per user for the quarter was a record $40.43, which increased by $3.02 compared to the year-ago period. An increase was driven by the sales of new services, including our VoIP, PC Card and other services, as well as a reduced level of promotional programs compared to the prior year. However, the company’s churn jumped to 3 percent, compared to 2.3 percent in the year-ago period, and 2.6 percent in the second quarter of 2008. The company explained that churn increased because of “significantly reduced marketing efforts in our pre-WiMAX markets and increased bad debt-related churn reflecting a difficult consumer economic environment.”
Release | Webcast | Transcript (via Seeking Alpha)
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