Clearwire Class A Earnings Call Nuggets: Controlling CapEx and Sprint Disclosure

Clearwire Corp Class A (NASDAQ:CLWR) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Controlling CapEx

Ric Prentiss – Raymond James: Couple of questions. First, Hope, on the CapEx, $102 million in the fourth quarter and I think I was writing down that you expect that pace to increase to higher level in the next coming quarters, would that be for all of ‘13 do you think or what’s your ability to moderate and kind of control the CapEx as we look out in the next couple of quarters?

Hope F. Cochran – CFO: As we think about our CapEx going forward, we have talked about the total LTE build and that’s up to the 8,000 sites, being in the range of about 600 million. For 2013 we are looking to build 5,000 of those sites and you can see that that work began in the Q4 period. So, as we look at CapEx in 2013 I anticipate that it will support the 5,000 sites build, as well as maintenance for the WiMAX period or WiMAX network and will be spread fairly consistently throughout the year to support that 2,000 site and 5,000 site milestones.

Ric Prentiss – Raymond James: think you said John was there for some technical questions. John, why don’t you just give kind of the sense T-Mobile has been talking a lot about and their plans to roll out LTE and how important contiguous spectrum blocks are. Can you talk a little bit about your spectrum position and what kind of bandwidth you expect to put out there and how important is contiguous?

Dr. John Saw – SVP, Chief Technology Officer: We have an average of 160 megahertz of spectrum in the top 100 markets and initial rollout for LTE, we’re rolling out systems using 20 megahertz of channelization and then we’ll see what happens when capacity grows from there. In terms of contiguous spectrum, I think 4G is although building better (prices) and obviously you need access to contiguous spectrum in order to realize those websites.

Ric Prentiss – Raymond James: Maybe one quick on DISH. I know you can’t speak much to it, but DISH’s proposal about getting 40 megahertz of spectrum, should we assume that that is mixed of owned and leased like your overall spectrum position, is there any way to get more color on what they were asking possibly to buy from you guys?

Erik Prusch – President and CEO: Again, we’re not going to discuss that preliminary indication of interest at this time.

Ric Prentiss – Raymond James: Was there any details in the SEC filing talking about what spectrum they were wanting?

Erik Prusch – President and CEO: Again, we’re not going to cover that on this call.

Sprint Disclosure

Jonathan Chaplin – New Street Research: So, there was some interesting disclosure in the Sprint proxy on their earnings release last week that I’d love to get your thoughts on. The first was $2 billion in incremental free cash flow that they think they could get from their business if they incorporate Clearwire into their build. And the second is it clear sign is they’ve got much greater capacity needs much sooner than they thought internally and certainly than we thought. And I’m wondering how that impacts your thought process around the price they’ve offered for Clearwire?

Erik Prusch – President and CEO: Jonathan, we’re not going to speak on behalf of Sprint that is a question that’s appropriate for them in terms of not only what they have in their filings, what kind of the nature of it. We’re going to stick our comments today to just the Q4 earnings release.

Jonathan Chaplin – New Street Research: Actually Erik, I was thinking more how that impacts your thought process about 297 is a price?

Erik Prusch – President and CEO: Again, we won’t comment on the transaction itself or the deliberations around it.

Jonathan Chaplin – New Street Research: More un-based question then, I noticed that Softbank has got six phones that all work on TDD-LTE that are available right now, are those – do those phones work on your network and you’ve been saying that at least some time later in the year when there would phones available I’m wondering why – what’s the difference is between those and what you need?

Dr. John Saw – SVP, Chief Technology Officer: I think I kind of mentioned in previous earnings call that we can treat those phones to work on our network, those Softbank phones. The difference between their phones and what we need here, it depends on our wholesale customer in this case Sprint. As you know, one of the requirements for a smartphone is to follow that to voice and in a case of Sprint, they have to follow that the CDMA voice. In Japan, I think those phones will fall back to GSM voice. So, there is a difference in terms of, we already fall back to – once the voice call comes in.

A Closer Look: Clearwire Class A Earnings Cheat Sheet>>