Tuesday, March 04, 2008

Clearwire's Numbers

Clearwire is still talking to Sprint on rolling out WiMax. But it isn't looking pretty from where I sit as both companies are hitting a wall. Sprint is about to announce another abysmal quarter with subscriber losses. And here are Clearwire's numbers:

  • annual revenue is $45.4 million
  • net subscriber add of 47,000 for 4Q, total subscriber base is 394,000
  • ARPU is $36.09!!!
  • churn rate increased to 2.4 percent!!!
  • the carrier is in "cash conservation mode." [fierce]

The churn and th e$36 ARPU are the painful points. Supposedly, Clearwire pays $180 spiff to resellers. I don't know if $180 is their total cost of customer acquisition, but even at $200 per user that's 6 months of revenue to just pay for adding the customer. (CPE, install, tower rent, AP lease, and bandwidth would be extra of course).

The numbers don't add up for me: $36 x 12 x 394,000 = $170M Not $45M. Even if you take away the 47k new subs: $36 x 12 x 347,000 = $149M. I'm not seeing that revenue any where. $45.4M divided by 12 months divided by $36 is 105,000 paying subs. The numbers don't add up.

To compound the problem, it seems like the Broadband adoption engine is slowing down (having peaked in 2006 with 10.4M adds). There are about 121 million households and about half have broadband. (About 25-30% do not have a computer). When this happens sales costs increase, because advertising and customer acquisition costs increase.

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