Q1 2010 Earnings Call
May 05, 2010 4:30 pm ET
John Saw - Chief Technology Officer and Senior Vice President
G. Sievert - Chief Commercial Officer
Erik Prusch - Chief Financial Officer
William Morrow - Chief Executive Officer and Director
Paul Blalock - Senior Vice President, Investor Relations
Sid Parakh - McAdams Wright Ragen, Inc.
Jonathan Atkin - RBC Capital Markets Corporation
John Hodulik - UBS Investment Bank
Michael McCormack - JP Morgan Chase & Co
Simon Flannery - Morgan Stanley
Phil Cusick - Macquarie Research
Michael Rollins - Citigroup Inc
Previous Statements by CLWR
» Clearwire Corporation Q4 2009 Earnings Call Transcript
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» Clearwire Q2 2009 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the First Quarter 2010 Clearwire Corporation Earnings Conference Call. My name is Janeta, and I will be your operator for today. [Operator Instructions] I will now like to turn the conference over to your host for today, Mr. Paul Blalock, Vice President of Investor Relations. Please proceed.
Thank you, Janeta. Good afternoon, ladies and gentlemen, and I'd like to welcome you to our first quarter 2010 Financial Results Conference Call. With me today are Bill Morrow, our Chief Executive Officer; Erik Prusch, our Chief Financial Officer, who will discuss Clearwire's first quarter results. As a reminder to all listeners, today's call is being webcast live on the Clearwire Investor Relations website and will be archived on that site and available for replay shortly after we conclude. Hopefully, you've all had an opportunity to read the earnings press release we issued a few moments ago, which provides detailed financial information on Clearwire's first quarter results.
Today's call may contain forward-looking statements reflecting management's beliefs and assumptions concerning future events and trends in or expectations regarding financial results. Forward-looking statements include, among other things, our future financial and operating performance and financial condition, including projections and targets for 2010 and subsequent periods, subscriber growth, network development and market launch plans as well as strategic plans and objectives and the need for additional financing. These forward-looking statements are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Listeners are cautioned not to put undue reliance on any forward-looking statements as they are not a guarantee of future performance. Please refer to our press release and our filings with the SEC for more information concerning risk factors that could cause actual results to differ materially from those in the forward-looking statements. The company assumes no obligation to update any of these forward-looking statements.
I will now turn the call over to Bill Morrow.
Thank you, Paul. Good afternoon, everyone. I know you've heard us say many times that Clearwire is in the right place at the right time with the right assets, and this quarter proved it again. We all know that mobile Internet penetration is ramping far faster than it did in the wired world. In fact, some forecasts now suggest that the number of mobile Internet devices could reach 10x the number of fixed devices within just the next few years. The government also expects the demand to increase well above our current national capacity. And we applaud the SEC's recognition of the importance of wireless spectrum as the key integral asset needed to fuel the growth of this next phase of the Internet.
As you know, the plan calls for 300 megahertz of spectrum to be allocated by 2015 and over half of this resides in or is paired with bands north of two gigahertz. We see this as a reaffirmation of the value utility and ultimate scalability of Clearwire's 2.5 gigahertz spectrum holdings, which is as you know, averages around 150 megahertz of depth in the top 100 U.S. markets.
Analysts’ and government predictions are one thing, but the ultimate indicator of having the right product service and cost model are the historic results themselves. The results for our first quarter was substantially improved over the prior quarter, including a 20% improvement in 4G coverage expanding to 41 million POPs, and when combined with international and our pre-4G service, we now have over 51 million Covered Pops. This in turn has led to a 41% improvement in our ending subscriber base, moving up to 971,000 customers, which includes a tripling of those who come through our wholesale channel partners.
Specific to our retail base, we are reporting a substantial improvement in our retail ARPU, reaching over $41 for the first time. The net of the top line, therefore, is a 33% improvement in revenue ending with $107 million. We've also controlled our cost drivers with a 30% improvement in our retail CPGA coming down to $439 and a 17% improvement in retail churn, now down to 3%.
And finally, our EBITDA loss narrowed from the previous quarter by 15% to $252 million. In a mobile Internet world, capacity is king as evidenced by our customers where they continue to use approximately seven gigabytes of mobile data per month. This is three to 4x that of a typical 3G mobile data user. This type of customer demand is a transformative event for the wireless industry and validates the need for our unmatched spectrum portfolio, as well as our network of networks approach to 4G.
Clearwire's network has become the mobile data foundation for leading communications service providers such as Sprint, Comcast and Time Warner. I'll stop here for now and let Erik take you through additional details of our results.
Thank you, Bill. I'm pleased to report that Clearwire's first quarter results demonstrate solid financial performance across the board. Our subscriber growth was strong, and we remain on track to triple our subscriber base and expect to end the year with more than 2 million customers. The 971,000 subscribers that Bill mentioned was a 94% increase over last year. We added 283,000 net new subscribers, including 172,000 new retail subscribers and 111,000 wholesale subscribers. We now have approximately 157,000 wholesale subscribers from our strategic partners of Sprint, Comcast and Time Warner Cable. It should also be noted that the wholesale subscriber base includes subscribers currently being sold dual-mode 3G/4G products across the country and even in markets where we have not yet launched, which is a great new development for our business. We received modest revenue from our wholesale partners for each of these units, and therefore, we are monetizing our network asset in future 4G markets.