Clearwire Raises $600M for WiMax Play
By Steve Donohue -- Multichannel News, 3/11/2007 8:00:00 PM
Craig McCaw wants to accelerate his high-speed data play.
McCaw's Clearwire raked in $600 million from its initial public offering last Thursday, funds that will help the Kirkland-Wash.-based company in its battle to gain high-speed Internet customers from cable operators and telephone companies.
Clearwire, whose investors include Intel and Motorola, said it intends to use the IPO proceeds to expand its wireless Internet access service area and acquire more spectrum.
Some 24 million shares of Class A common stock were sold at $25 per share on the NASDAQ under the “CLWR.” The stock lost ground on its first day of trading, closing at $24.62 per share.
Last July, Clearwire withdrew a planned $400 million IPO. It instead received a $900 million cash infusion from Intel and Motorola.
DOUBLING REACH
Based on WiMax technology capable of delivering speeds of 1.5 Megabits per second — fast enough to deliver video and phone services — Clearwire already offers wireless Internet access in 35 U.S. markets, covering some 350 municipalities.
Clearwire plans to rapidly broaden its reach from areas that passed 8.6 million potential subscribers at the close of 2006 to between 16 million to 18 million by the end of this year. That base could more than double to 45 million by the end of 2008, the company said in a filing at the Securities and Exchange Commission Wednesday.
All told, Clearwire, which was founded by McCaw, the former cable system owner and cellular telephone pioneer in 2003, counted 184,400 U.S. customers and 21,800 international customers at the end of last year.
“We believe this deployment schedule could result in as many as 375,000 to 400,000 total subscribers in both our U.S. and international markets by the end of 2007,” Clearwire wrote in its S-1 registration filing with the SEC.
The company, noting that half of the new customers it signed in December were subscribers of cable or telco data services, said there is strong demand for wireless high-speed Internet service.
“We believe that substantially all of the households we cover have access to cable-modem and/or DSL Intent services, leading us to conclude that our rapid subscriber growth rates reflect the mass market appeal and robust customer demand for our differentiated services, even in the presence of highly competitive wireline broadband alternatives,” Clearwire said in the SEC filing.
As Motorola and other manufacturers begin to produce new mobile devices that rely on WiMax spectrum, including notebook computers, personal data assistants, gaming consoles, MP3 players and other handheld devices, Clearwire expects demand for its high-speed wireless service to climb.
“We believe demand for mobile applications will dramatically increase, including demand for e-mail, Web browsing, [voice-over-Internet Protocol] telephony, streaming audio and video, video conferencing, gaming, e-commerce, music and video downloading and file transfers,” Clearwire wrote in the S-1 filing.
PACKAGES AND PRICES
Clearwire's WiMax services are available in cities in Florida, Texas, Minnesota, California, Nevada, North Carolina, Hawaii and Oregon. Its largest market is Seattle and Tacoma, Wash., where the company's network reaches 2.13 million people.
Its ClearValue service proffers download speeds of 768 Kilobits per second and costs $24.99 to $29.99 monthly, while its ClearPremium package, selling for $34.99 to $37.99 monthly, offers speeds of up to 1.5 Mbps.
Clearwire posted a net loss in 2006 of $284 million, double its deficit of $140 million in 2005, according to SEC filings. The company's total revenue jumped $66.7 million to $100.2 million in 2006.
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