WiMax operator Clearwire has released its financial results for the fourth quarter of 2010 (and, thus, for the whole year), and from some angles the numbers look pretty good. The company’s 4G WiMax network now reaches almost 120 million people, it as 540 percent more subscribers than it did at this time last year, and it had revenues of $181 million during the fourth quarter, up 126 percent from the year before. However, perhaps more important to Clearwire’s future, the company says it expects to resolve its pricing dispute with Sprint over providing WiMax services very soon, which will clear a major dark cloud on the company’s horizons.
“Over the past few weeks, Clearwire and Sprint have held a number of productive discussions about the outstanding wholesale pricing issues,” the company wrote in a statement. “While nothing has yet been finalized, the company believes that an agreement with Sprint resolving those issues is imminent.”
Sprint and Clearwire have been locked in a pricing dispute over the rates Sprint pays to Clearwire to offer WiMax services on Clearwire’s network. Sprint is the majority stakeholder in Clearwire, but feels it is being charged far too much per subscriber to access Clearwire’s network. Sprint is currently Clearwire’s largest wholesale partner, although Clearwire earns a lot more per subscribers when it connects customers directly. Sprint has been struggling to shore up its own bottom line, and in the last year has ruled out additional investments in Clearwire to help it extend reach of its WiMax network—the move led Clearwire to lay off staff and roll out a $1.1 billion debt offering to raise money. Instead of investing in Clearwire, Sprint may be looking to roll out LTE service using its own spectrum licenses.
Clearwire also says it remains “very committed to our retail distribution model,” although it plans to “prudently” pace its retail operations to stay within its financial constraints. Recent reports have had Clearwire backing away from its retail operations, which have also been a source of friction with Sprint. Sprint doesn’t want to be competing with Clearwire as a provider of WiMax services at a retail level, and has argued Clearwire is throwing money away trying to run retail operations when it should be focused on operating a wholesale business.
Clearwire’s prospects will be bolstered by resolving its pricing dispute with Sprint; the company is also considering fueling its network expansion through the sale of “excess” spectrum to third parties. Although no deals have been done—and Clearwire hasn’t committed to selling any spectrum—the process has led some unidentified third parties to discuss “other strategic transactions” with Clearwire. Industry watchers generally view T-Mobile as the primary bidder for Clearwire’s spectrum, although neither company has commented on specific talks.