Mobile broadband provider Clearwire signed up a record 1.9 million net wholesale subscribers in the third quarter 2011, representing approximately 29% sequential growth through partners including Sprint Nextel, Comcast and Time Warner Cable, resulting in higher-than-expected revenue for the period.
The company expects to report record quarterly revenue of approximately $332 million for the three months ended Sept. 30, representing an increase of approximately 126% year over year. Clearwire reported the preliminary results in advance of a presentation by chief financial officer Hope Cochran at the Deutsche Bank 19th Annual Leveraged Finance Conference on Thursday.
Clearwire shares climbed 17% by midday trading Thursday, to $1.52 per share.
Clearwire suffered a blow on Sept. 7 when Sprint Nextel -- its majority owner -- announced a plan to upgrade its own network to 4G speeds and said it would stop reselling Clearwire service after the end of 2012. That sent Clearwire shares tumbling 36% to close at $1.39 per share last Friday.
In a statement about Sprint's Network Vision strategy announcement, Clearwire said, "Sprint remains dependent on Clearwire for 4G and nothing about today's announcement changes that. Even with their reallocation of existing spectrum, it's obvious that their spectrum resources are insufficient to meet the long-term demands of mobile data, but this is not unique to Sprint. Data capacity will clearly stress the capabilities of the low capacity 4G deployments of other carriers due to their spectrum constraints."
Clearwire expects to report 9.5 million total subscribers as of the end of the third quarter. As a result of the subscriber growth and reductions in operating expenses, Clearwire expects to narrow its loss on an adjusted earnings before interest, taxes, depreciation and amortization basis by more than 50% in third quarter 2011 versus a $108.5 million adjusted EBITDA loss in the second quarter of 2011.
Clearwire investors include Sprint, Comcast, Time Warner Cable, Bright House Networks, Intel, Google and others. Clearwire's capital-intensive business model has left it with $78.8 million in cash and equivalents as of the end of June 2011, compared with $1.23 billion at the end of 2010.
Clearwire, based in Kirkland, Wash., expects to release full third-quarter financial results in the coming weeks.