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Clearwire Loss Narrows on Wholesale Revenue Decline

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02/12/2013 | 04:55pm EDT

--Clearwire declines comment on deal-review process by board committee

--Conducting monthly review of whether to take financing from Sprint

--Network overhaul to LTE technology remains on track

Clearwire Corp. (>> Clearwire Corporation) reported a narrowed fourth-quarter loss and has started work on a major network overhaul, but remained mum on its deal review process.

Majority shareholder Sprint Nextel Corp. (S) has agreed to buy the half of Clearwire it doesn't already own in a $2.2 billion deal. Complicating matters, Dish Network Corp. (>> DISH Network Corp.) has proposed buying Clearwire at a higher price; Clearwire's board has said it will negotiate with both companies but continues to back its deal with Sprint.

During a conference call Tuesday, Clearwire Chief Executive Erik Prusch declined to comment on the deal because "the review process is ongoing." Analysts attempted to ask multiple questions about the deal on the shorter-than usual call.

Clearwire's closing stock price of $3.18 is above the $2.97-a-share offer from Sprint but below the $3.30 offer from Dish. Some Clearwire shareholders are opposing Sprint's offer, which will be subject to shareholder vote in coming months.

Earlier this week, Sprint Chief Executive Dan Hesse expressed confidence in completing the Clearwire deal. In an interview, he said the company will "wait and see what happens with the shareholder vote."

Chief Financial Officer Hope Cochran said Tuesday the board committee's review process includes a monthly evaluation of whether to take funding from Sprint that was part of the acquisition agreement. Clearwire didn't draw on the funds in January or February, and $640 million remains.

Sprint has agreed to provide up to $800 million in financing to Clearwire by buying $80 million in notes per month for 10 months. When Dish made its buyout proposal to Clearwire, it said it would withdraw its proposal if Clearwire drew on the Sprint funds.

Clearwire ended the quarter with about $869 million in cash, down from the $1.2 billion it had at the end of the last two quarters. Capital spending rose to $102 million in the quarter, up from $34 million last quarter and $23 million a year ago.

The increased spending mostly comes from Clearwire's effort to overhaul its network. It is playing catch-up to the major U.S. carriers in rolling out 4G LTE technology, a transition from its original WiMAX 4G service.

On Tuesday, Clearwire said it is on track to have 2,000 LTE cell sites operating by the end of June and 5,000 by the end of the year.

For the latest quarter, Clearwire reported a loss of $187.2 million, compared with a year-earlier loss of $236.8 million. On a per-share basis, earnings were down at 29 cents from 81 cents, as the number of shares outstanding jumped sharply.

Revenue fell 14% to $311.2 million, driven by a 29% drop in wholesale revenue to $116.6 million.

Analysts polled by Thomson Reuters were expecting a loss of 27 cents a share on revenue of $314 million.

The company ended 2012 with 9.6 million subscribers, down 8% from 10.4 million a year earlier. The vast majority of Clearwire's subscribers are wholesale customers from Sprint. The declines in wholesale revenue and subscribers stemmed from the Sprint's discontinuation of WiMAX-based plans.

-Kristin Jones contributed to this story.

Write to Thomas Gryta at thomas.gryta@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Stocks mentioned in the article : Clearwire Corporation, DISH Network Corp.
Stocks mentioned in the article
ChangeLast1st jan.
DISH NETWORK CORPORATION 0.28% 31.96 Delayed Quote.27.99%
SOFTBANK GROUP CORP -1.11% 4897 End-of-day quote.-30.09%
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