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Executives

Paul Blalock - Vice President, Investor Relations

William T. Morrow - Chief Executive Officer

Erik E. Prusch - Chief Financial Officer

G. Michael Sievert - Chief Commercial Officer

John Saw – Chief Technology Officer

Analysts

John Hodulik - UBS

Simon Flannery - Morgan Stanley

Michael Nelson – Soleil Securities

Phil Cusick - Macquarie

Bob Kricheff – Credit Suisse

Eric Malek – Raymond James

Michael Funk – Bank of America/Merrill Lynch

Kevin Rowe - Rowe Equity Research

Clearwire Corporation (CLWR) Q4 2009 Earnings Call February 24, 2010 8:30 AM ET

Operator

Welcome to the fourth quarter 2009 Clearwire Corporation earnings conference call. (Operator Instructions) I would now like to turn it to your host for today, Mr. Paul Blalock, Vice President of Investor Relations. Please proceed, Sir.

Paul Blalock

Thank you. Good morning ladies and gentlemen. I would like to welcome you to our fourth quarter 2009 financial results conference call. With me today are Bill Morrow, Chief Executive Officer and Erik Prusch, Chief Financial Officer, who will discuss Clearwire’s fourth quarter and full-year 2009 results. In addition, Michael Sievert, Chief Commercial Officer and John Saw, Chief Technology Officer and well as Hope Cochrane, Senior Vice President and Treasurer will join us for Q&A.

As a reminder, today’s call is being webcast live on the Clearwire Investor Relations website and will be archived on that site and available for replay shortly after we conclude. Hopefully you have all had an opportunity to read the earnings release we issued early this morning which provides detailed financial information on Clearwire Corporation’s 2009 fourth quarter results. A reconciliation of pro forma financial information and any non-GAAP financial measures discussed on this call can also be found in our earnings release.

Today’s call may contain forward-looking statements reflecting management’s beliefs and assumptions concerning future events and trends in or expectations regarding financial results. Forward-looking statements include, among other things, our future financial and operating performance and financial condition including projections and targets for 2010 and subsequent periods, subscriber growth, network development and market launch plans, strategic plans and objectives and projected liquidity. These forward-looking statements are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Listeners are cautioned not to put undue reliance on any forward-looking statements as they are not a guarantee of future performance.

Please refer to our press release and our filings with the SEC for more information concerning risk factors that could cause actual results to differ materially from those in the forward-looking statements. The company assumes no obligation to update any of these forward-looking statements.

I am very pleased to be here. I look forward to working with you. I truly believe that Clearwire is in the right place at the right time with the best mix of resources required to make the future a very positive experience for our customers and investors. I will now turn the call over to Bill Morrow.

William Morrow

Thank you, Paul. Good morning everyone. As always we appreciate the interest you have in our company and also for taking the time this morning to hear how we wrapped up last year.

2009 was monumental for us in reaching key milestones. We saw our vision become a reality. Our network build last year was among the fastest ever achieved in a single year. We now operate the largest 4G network in the country with a spectrum position and technological advantage which we believe is superior to any other U.S. mobile carrier. The timing could not be better.

Numerous studies continue to reinforce that the demand for mobile data is accelerating and the existing 3G technology and spectrum is insufficient to handle the growth. We realize being first to market is valuable and therefore execution on our business plan is key to our success. We believe our results for last year both demonstrate the validity of our plan and we are able to execute accordingly. Whether it is our 45% year-over-year customer growth reaching 688,000 subscribers or our 19% increase in revenue or our ability to raise $4.3 billion it is the facts in our past and our belief in our future that makes us more determined and confident than ever.

To give you the same confidence, Erik is going to share some details first on how we delivered on our build plans. He will then go into our strong subscriber and revenue growth and then finally he will wrap up with where we ended our financial metrics. I will then come back and follow-up with the opportunities we see for the remainder of this year and beyond.

With that, Erik?

Erik Prusch

Thank you Bill. I am pleased to report that Clearwire’s fourth quarter and full-year 2009 results demonstrate solid financial performance. In the fourth quarter we launched a majority of our 4G markets, added significant funding for the network build out and experienced strong growth in the 4G subscriber base late in the year.

My comments today will be directed to a comparison of 2009 actual results with pro forma 2008 results as we believe these represent the most meaningful comparisons.

Our 4G network coverage exceeded our year-end objectives by reaching more than 34 million people. As most of you know we started 2009 with just one launched 4G market and ended the year with 27. When combined with our pre-4G markets we ended last year covering 44.7 million people, 145% increase year-over-year.

In the fourth quarter alone we launched 4G in 13 markets including some of the nation’s largest cities such as Chicago, Dallas and Philadelphia just to name a few. Awareness of the Clearwire brand is steadily rising in the markets we serve and we believe Clear is rapidly becoming recognized as a radically new kind of internet experience. We continue to listen to our customers in our previously launched markets so that we can refine our messaging, our site placement, our network density and our commercial offers; all of which becomes new criteria in our subsequent launches across the nation.

To fund this ongoing rollout we successfully raised approximately $4.3 billion during one of the most difficult economic periods in modern history. This included $1.56 billion of equity from our strategic investors and the remainder in debt of which a portion was also used to refinance the prior facility moving the maturity from 2011 to late 2015. The final trench of equity for $66 million is expected to close in the coming weeks.

We continue to have the potential of raising further equity with a rights offering for approximately $300 million which will end in June. Taken together we believe this demonstrates confidence by our investors and debt holders of the underlying value of Clearwire and our opportunity to serve a growing demand for a high speed mobile internet service.

This demand is evident with our strong subscriber and revenue growth. Clearwire ended 2009 with 688,000 total subscribers which is a 45% year-over-year improvement. In our effort to provide more transparency, this total end of year count is a combination of 642,000 retail and 46,000 wholesale customers. All of the wholesale and nearly 2/3 of the retail are in 4G markets representing 438,000 customers.

Specific to retail, our net adds for the year were 168,000, twice that of the year before. On a quarterly basis our Q4 retail net adds were 87,000 which surpassed the three previous quarters combined. Relative to wholesale, Sprint, Comcast and Time Warner Cable began actively reselling 4G services in 2009 establishing our position as the 4G network of networks. As I mentioned on our last earnings call our wholesale partners comprise the largest channel for us to access customers, representing an existing combined base of over 100 million users. By the end of fourth quarter Comcast was offering Comcast High Speed to Go bundled service in seven cities including Atlanta, Chicago, Philadelphia, Portland, Salem, Seattle and Bellingham.

Sprint continued to promote their Sprint 4G service and 3G/4G dual mode devices. Sprint now offers service in all of Clear’s markets and is expected to resell service in every market we launched this year. In addition, Time Warner Cable launched its Roadrunner mobile 4G service and today offers service in Charlotte, Greensboro, Raleigh, Dallas, San Antonio, Honolulu and Maui. This obviously supports our revenue growth.

Total revenue for the full-year 2009 was $274.5 million which is up 19% over pro forma 2008. For Q4 revenue, revenue was $79.9 million which is up 34% year-over-year. Retail ARPU was $39.86 in the fourth quarter and $39.65 for the full-year. For 2010 we expect retail ARPU to remain steady. Consolidated retail churn both domestic and international rose to 3.1% for the year and 3.6% for the quarter and does not include wholesale results.

The higher retail churn is a result of the transition process in our pre-WiMAX markets. Once we fully convert with WiMAX we experience lower customer churn. On a normalized basis by removing conversion markets churn was approximately 3% for the fourth quarter and consistent with 2009 levels for the full year.

Retail CPGA was $565 for the year and $624 for the fourth quarter. For the rest of the year we expect retail CPGA to remain consistent with 2009 levels due a significant increase in launch markets. The adjusted EBITDA loss was $780.7 million for the year and $295.7 million for the fourth quarter 2009.

Capital expenditures were $1.54 billion for the year and $767 million in the fourth quarter and includes approximately $200 million on capital expense on markets to be launched in 2010. For 2010 we expect to spend approximately $2.8-3.2 billion in total cash during the year. You should note the timing and extent of our future plans are subject to a number of conditions including our performance in our launch markets, the accuracy of our planning assumptions and whether we seek and obtain additional funding.

On the funding side we successfully raised approximately $4.3 billion in 2009 and we exited 2009 with $3.9 billion in total cash and investments. We have additional availability under our debt covenants and we are in control of our spending plans. We will keep you posted on any tweaks to this aggressive build plan and we will remain smart about capital spending.

Lastly, rapid growth such as that realized is not without its challenges. We have identified a material weakness in controls and as such have written off approximately $30 million in equipment inventory and increased reserves for obsolescence and shrinkage by $11 million. This will appear in our 10K which will be filed shortly. The write down relates to weakness in controls surrounding the reporting and monitoring of network infrastructure equipment within our logistics organization. To remedy this we are modifying our procedures and we are evaluating adding new resources to our logistics organization, focus on transaction processing and systems improvements.

Finally we are performing additional physical counts and cycle counts of equipment during the first quarter of 2010. We are confident we can resolve this issue.

In summary, these results demonstrate a company that is serious about delivering on our commitments and we remain confident in our ability to continue to offer customers the best mobile broadband service available. I am very excited about delivering on our 2010 financial and operating plans.

With that I would like to turn it back over to Bill.

William Morrow

Thank you Erik. We are often asked about our plans for 2010 and the opportunities beyond. To answer this question I am going to try and break this down into four areas. First, the explosive demand in mobile broadband. Second, our market build plan for the remainder of this year. Third, our plans to expand our wholesale partnerships. Finally, our ability to leverage the spectrum and network architecture.

According to IDC’s December 2009 worldwide digital marketplace model and forecast there are currently more than 450 million mobile internet users around the world and that figure is expected to more than double over the next four years, topping the 1 billion mark. Worldwide the number of devices including PCs, mobile phones, video consoles, etc. that connected to the internet last year exceeded 1.6 billion. By 2013 IDC expects the number to rise to 2.7 billion.

Cisco has recently revised upward its forecast for mobile data traffic to double every year through 2014 for a compounded annual growth rate of 108%. This means that we will reach 3.6 exabytes per month by 2014. So clearly again we are in the right place at the right time. Throughout the year we will continue to lay the foundation to take a reasonable share of this growing demand by substantially expanding our 4G network. We continue to target building the network to cover up to 120 million people by the end of the year but make no mistake about it, this is an aggressive build plan. A plan that will break records for anything prior here in the United States.

We have and we continue to scale the business to achieve this objective. We have a new leadership team supporting an expanded soft talent workforce. We are adding new nationwide contractors to support the build. We are about to go live with our scalable Amdocs IT support system and we have proven processes with increasing discipline that are necessary to execute on this plan.

The next market to launch will be Houston and is scheduled to go live in the coming weeks. Later this year we will launch in major markets such as San Francisco, New York, Boston, Washington D.C., Minneapolis, Denver and Kansas City. As was in 2009 we expect the bulk of our 2010 market launches to take place towards the end of this year and while the network build activity is well underway across dozens of new markets we are studying our experience in those already launched and working with existing and future wholesale partners to optimize our subsequent launches.

Many of you have heard us talk about the 4G network of networks as Erik just mentioned and this is really to support the emerging consumer demand in the fastest, most efficient way possible. Expanding the wholesale channel, we intend to enter into additional third-party wholesale agreements with other companies later this year. There is certainly no shortage of companies we believe could benefit from our 4G network. ISPs, fixed line and wireless carriers, retailers and consumer electronics companies could all benefit from the evolution of connected devices and the unmatched capabilities of our mobile broadband network.

Beyond 2010 we expect to continue to expand into new markets and for the existing ones we will augment our existing capacity and of course continue to offer additional services and applications to our customers. The timing and extent of our future plans is subject to a number of uncertainties including marketplace dynamics, our performance in the markets we serve and the opportunities that can generate additional funding.

Core to our strategy is our ability to leverage our superior spectrum holdings, our all IT backbone and the approach to a common and open architecture. We have the foundation in place right now that incumbent 3G providers do not. As I have said in the past we do not have to unseat any of these giant telco’s in order to be a successful business. We remain confident we will gain our fair share of this brand new market opportunity for mobile broadband.

As a long time veteran of the wireless industry, I know that consumers don’t care about technological underpinnings. They just want quality, affordable services that work where and when they want. For this very reason we maintain we are technology agnostic and we will utilize the best that is available. Today we believe that our 4G WiMAX delivers better speed and latency performance than any other mobile network here in the United States. This is a robust, well deployed technology with an emerging ecosystem behind it.

In fact, earlier this month it was confirmed that WiMAX growth is surpassing expectations. WiMAX service providers have launched in 147 countries, now covering 620 million people and the WiMAX forum expects this technology to cover more than one billion around the world by the end of 2011. As most of you know by now, Clearwire has assembled an unmatched technical position which we believe gives us a unique and sustainable advantage to serve our retail and wholesale businesses.

This translates in the ability to service more customers with greater capacity and greater speed, all with the scale advantage to reduce the cost of data transmission. It also affords us the opportunity to evolve to the latest radio technology if and when there is a reason to do so. Again, it is all about the customer and meeting their needs. As we study the behavior of our customers we are observing a similar phenomenon when the fixed line market went from dial up to broadband.

Speed and capacity are correlated on these sorts of shared networks. As broadband began to compete with dial up users noticed a difference. They paid higher prices. We saw a substantial increase in usage. Our mobile customers have an average monthly data usage in excess of 7GB and information while somewhat sketchy in the marketplace looks to be about 4-8 times greater than 3G data mobile usage and I would say it is more akin to what our wire line broadband ISPs are reporting.

We have also observed that our existing pre-4G customers roughly doubled their usage after we upgrade them to 4G. All of this again suggests there is a pent up demand and that the latest technology and healthy spectrum position are key advantages for any carrier. So again, to wrap all of this up I reiterate we are very pleased with our fourth quarter and full-year 2009 results. We believe this represents probably the best growth in the company’s history. We have a unique and unmatched spectrum portfolio, a go to market strategy with industry leading wholesale partners, proven results coming through and we are on our way to building out our network.

All of this leads to us being well positioned to capitalize on the opportunities that are in front of us. Again we appreciate your continued confidence and support and with that we would like to answer any questions you may have.

Question and Answer Session

Operator

(Operator Instructions) The first question comes from the line of John Hodulik – UBS.

John Hodulik - UBS

Paul, welcome to the Clearwire team. I look forward to working with you. Churn and CPGA, both of them rose a little bit higher than we had modeled. In terms of churn can you talk about I think you referenced 3% in the mobile WiMAX market. Is that what we could expect going forward? Could you give us a little breakdown? Are wire customers potentially churning from the mobile WiMAX service, is it involuntary or voluntary? Are there service quality issues that you build out? If you could expand a bit about that. Then CPGA, maybe just reference a bit about what you are seeing from a competitive standpoint. Again, that seemed to be moving up but if you could talk about the drivers there that would be great too.

G. Michael Sievert

Let me just start with the churn question that you had. Again let me just explain the comment that Erik made which was the churn for the quarter was 3.6% but when you normalize for the conversion customers in conversion markets and just look at our operational churn as a business it was about 3%. In fact it was a tad under 3% for the quarter.

There is a number of things on churn. A couple of things to point out is that churn includes all of our customers including our pre-WiMAX, pre-4G customers as well as our international customers which pushed the number up a little bit overall. Our WiMAX is running a little bit less than that 3% figure we gave you. Really there is a number of things that are at play with churn.

In general what we are seeing is with our business as our customers come on the customers that have been with us the longest have a little bit higher churn rate but customers who have been with us a shorter time have a little bit lower churn rate. So it is really a blend of things. What you expect overall as you build more and more is that you have a little bit of churn pressure coming from more of your customers coming from older markets. But you also have churn benefit coming as you continue to build. We have markets we have been in for over a year where we are actually still building; adding sites and adding cities and those things increase the value proposition and cause customers to stay with you.

The final thing I will say is our non-pay churn is typically about 1/3 of our total churn. These are people who just stopped paying their bills. Bad debt, bad credit. That is actually a little higher. It has actually picked up a little bit more than 1/3 recently and we attribute this to economic factors.

So let me talk about CPGA very briefly. CPGA for the quarter was 625. Overall for the year it was 565 and you can expect our performance for the year to be in line with the 2009 average, not in line with the recent Q4 CPGA. That really was a CPGA driven by a big launch quarter. What you get in essence is the full spending of launches in markets but only the partial benefit of customer loading in the quarter because customers come on for parts of months. So CPGA as you know is a pretty simple calculation. It is all the money you spend in sales and marketing divided by the number of customers you bring on. So we come in and launched pretty strongly in the beginning.

If you look at markets we have been in with WiMAX a longer time, CPGA is already coming down. The final thing I will say is about both churn and CPGA is they were both well within our expectations. Absolutely on our forecast.

Operator

The next question comes from the line of Simon Flannery - Morgan Stanley.

Simon Flannery - Morgan Stanley

Given the fundraising you have done over the last several months how are you now thinking about 2011 and beyond? You said again up to 120 million but as we think out is this something where you now feel more confident to get to $200 million? I think comments from some of your wholesale partners seem to suggest you will be ramping that to build. Perhaps give us some clarity there. On the current build perhaps you could just talk through where your tower count is now and what you expect for the balance of the year.

William Morrow

I will address the funding issue and then ask Dr. Saw to comment on the number of towers. As we look at our business we know there is a lot of interest in it from a number of different companies. While we have our sights on what we are doing this year we are also looking at the horizon for the future growth whether that comes from a self-funded perspective and from other investments or other funding opportunities we will look at those as those are presented. For right now we are focused on the 120 million plan for this year.

Simon Flannery - Morgan Stanley

When do you think the decision might come on 2011 and beyond?

William Morrow

I would look at…as it is related to future funding I would say as the opportunity presents itself and I am not sure exactly when that would be, it could come throughout the year. Just within our self-funded program of course as we have talked about before the time it takes us to get profitable is typically in the 18 month range. So it would be sometime beyond that after our markets launch.

Dr. John Saw

With regard to tower count, in 2009 we ended the year with slightly under 5,000 towers on air. For 2010 and also the breadth of 2011 we are working on slightly under 20,000 towers to cover the pops we need to do.

William Morrow

That is 20,000 in total, right?

Dr. John Saw

Yes.

Operator

The next question comes from the line of Michael Nelson – Soleil Securities.

Michael Nelson – Soleil Securities

You obviously had a nice ramp in subscriber growth particularly in your retail channel. Can you give us some color on where these customers are coming from? Are they mostly cable or telco customers? Are they taking the service as a second connection or is it a primary device? A second question on the regulatory landscape, with the SEC set to deliver its national broadband plan to Congress on March 17th I was wondering if you could provide us with your expectations and what opportunities and risks the plans may present to Clearwire?

G. Michael Sievert

Customers for us come from a variety of sources. A very small number is their first internet connection. A majority are adding this to their internet life. They have some other internet connection and they really view this as a way of taking true broadband with them on the go and some actually use it as a replacement. Roughly half of the customers come on and use it overall as a replacement to whatever it is they were having before which is a combination usually of DSL or cable broadband. That gives you a little bit of color.

In terms of who it is, it really runs from all walks of life. The most popular segments we have been penetrating in the first year in our WiMAX markets have been younger people, more mobile, under 35, people who are apartment dwellers and love the idea of the mobility and not being tied to a building. What is interesting is we are now experiencing growth in suburban families and also in small businesses. So it is really becoming a multi-segment business.

William Morrow

Regarding the second question on the regulatory, the National Broadband Plan, this is something that obviously Clearwire is paying close attention to. We do see an opportunity perhaps that would happen in the future to help fund some of the expansions that are not in our current plan. We don’t believe this is necessarily material in a large sort of way but we are staying close to it. We are working with the government on being sure they have the right criteria that meets their overall stated intent.

Operator

The next question comes from the line of Phil Cusick – Macquarie.

Phil Cusick - Macquarie

First, if you could talk about the guidance the tripling of 4G subs, is that off of the base including wholesale and does the tripling include wholesale? Maybe you could talk about that a little bit. Second if you could talk about the wholesale timing so far, you ended with 46,000 but how did those come through? Were those mostly in the quarter or was there a decent chunk going into the fourth quarter?

Erik Prusch

As far as the tripling is concerned, yes it includes wholesale. So the guidance we are providing is comprehensive on that. As far as what we are doing in Q4 with the majority of those wholesale adds were in Q4. We are seeing a great ramp in the wholesale business and we are very optimistic about the future.

Operator

The next question comes from the line of Bob Kricheff – Credit Suisse.

Bob Kricheff – Credit Suisse

In the press release you gave the EBITDA and the CapEx together for the quarter which add up to about $1.62 billion and the cash in the quarter was around 823. I assume that was just timing on spending on actual cash leading to the capital expenditures. If you could clarify that. Also your numbers on cash burn for next year you talked about I think $2.8-3.2 billion. Is that inclusive of interest expense? Lastly could you give us an update on where the cash position is currently right now?

William Morrow

As far as the timing of Q4 yes that is just a timing issue and it was as expected. We left the year spending about $1.95 billion which is right around where we expected and includes the fact we started to pre-spend for the 2010 build to the tune of about $200 million. It came within what we had set out. As far as the cash burn, next year of between $2.8-3.2 billion is the correct number. That would include interest as well. Then your last question…

Bob Kricheff – Credit Suisse

Could you give us an update on where the cash position is?

William Morrow

Cash position at year-end is all that we are updating which is $3.9 billion.

Operator

The next question comes from the line of Eric Malek – Raymond James.

Eric Malek – Raymond James

Can you talk about what you are seeing currently on the OpEx and CapEx going in your new markets? I know you have given us in the past and I just wanted to see with all the markets you launched in the fourth quarter if it is still on track and whether those markets launched in the fourth quarter have generally been on budget for what you were thinking about? Second, it looks like you turned on over a dozen of your pre-WiMAX markets and converted them over to 4G or turned on 4G. Can you give us an idea of what your timeframe is to convert the rest of them over and how long you would intend on running a dual 4G and pre-WiMAX network when they are both up?

Erik Prusch

As far as how our early markets are doing they are certainly within our budgeted expectations. We have actually seen some improvement in performance from our first market which was Portland to Las Vegas and Atlanta. So we still are holding the expectation that we can get our markets to EBITDA profitability within that 18 months period of time. So we are still on track with that. We are learning every day and we are applying those learnings to all new markets.

G. Michael Sievert

Just to add to what Erik said, the other thing about it is as we continue to launch more markets we continue to perfect the formula. So if anything our recent launches have been coming out of the gates a little bit stronger. You saw that in our gross add additions and look to be tracking towards that 18 month goal and perhaps even in a more solid way than our initial one or two WiMAX launches.

Finally on conversion markets I am sorry, actually we can’t give you much on that. Just to give you a sense for the size though remember we are down to about 10 million covered pops in that pre-WiMAX business. That is about 3 million pops internationally. About 7 million pops here in the United States. It is really only a small number of cities. We haven’t really said exactly when we would be doing those conversions. Some of them will be ongoing this year.

Finally you mentioned the overlap. Typically what we do when we do that conversion we operate both networks for about 90 days.

Operator

The next question comes from the line of Michael Funk – Bank of America/Merrill Lynch.

Michael Funk – Bank of America/Merrill Lynch

First on the additional funding requirements you mentioned a few times a potential for raising additional capital. If you could just address the ability to raise both equity and debt in relation to the existing covenants. Then how the additional funding requirements relate to the 120 million covered pops you are projecting versus going out beyond that. Second, I think on the churn metric you mentioned non-pay disconnect is slightly higher this past quarter than historically. If you could just talk about maybe the credit standards that you are using and how these have changed, or how you are thinking about the credit standards going forward?

Erik Prusch

As far as the first question is concerned what we stated earlier is the amount of money we have raised and we combined with cash on hand of $3.9 billion including the expectations of a rights offering which is around $300 million and everything else we have available under our existing debt covenant allow us sufficient capital in order to build out to 120 million pops.

That is the expectation we have out there. To the extent we have additional funding availability beyond that we have discussed wanting to build past 120 million pops, potentially focusing on increasing density and capacity in our network, building infrastructure, and of course with the new debt that we have got there is higher interest expense as well. We believe we are funded to the 120 million pops with everything we have available. Beyond that we haven’t commented but certainly it is management’s expectation we want to build a bigger network.

William Morrow

I will just add a little bit and then ask Mike to comment on the credit question you have. We still have the rights offering outstanding as you are aware. We also have some opportunities with vendor financing that we will be looking at and if we do bring in some money from this it will be kind of our ability to have a little bit of adjustment factor for the current year plan. So whether it is readying ourselves for 2011 or whether it is refining the flexibility of how we deploy to markets, if we do get something from that it wouldn’t necessarily mean it is going to take us beyond the 120. Mike do you want to talk about the credit question?

G. Michael Sievert

On the credit standards I mentioned a minute ago that typically and traditionally about 1/3 of our churn is non-pay churn and in the last couple of quarters it has been a little bit above that. To answer your question, no we haven’t made any changes operationally in how we run the business. We really do attribute that little piece of it to macro economic factors. The vast majority of our customers are on two year contracts and in order to quality for those contracts they do have to pass a credit check with us. We don’t get into the details of our credit check process but it is typical for wireless carriers. The majority of those people are passing that credit check and we haven’t made any changes to the credit standards.

Operator

The next question comes from the line of Kevin Rowe - Rowe Equity Research.

Kevin Rowe - Rowe Equity Research

Can you discuss recent reports of a dual band 3G/4G handset availability sometime mid this year and how important that is to your 2010 growth and maybe touch on what the handset pipeline looks like for 2010? Switching to wholesale as you layer on new wholesale relationships for modeling purposes are the economics of these relationships with the expectation they would be similar to your existing wholesale agreements or could they be better?

William Morrow

As we think about this year for us is again what I stated in the opening is our focus is primarily on the mobile computing. We think this is really where the best return is. This keeps subsidies practically down to zero and has lots of quality devices and embedded chips. I think it is about 30 different devices now our customers can choose from that fall into this mobile computing platform. Ultimately we are going to go down the path of Smart Phones because that is a gateway into many more data applications, much more of the mass market scale that we will eventually ramp up to.

There are some press reports out there naturally that are taking place against Smart Phones and how they are going to be on the WiMAX network. We very much expect that to happen later in this year. Again our primary focus is around mobile computing.

When you ask about wholesale and economics, as we have maintained if you take kind of the raw number of looking at the way in which we price wholesale it was all designed to be able to get us the same basic margin and you look at that top level customer. As we roll this wholesale model out we are going to be bringing on non-strategic investor group type wholesale customers that may have customized different pricing models but we will be looking at it from an accretive point of view regardless of which customer we end up signing up. Right now we are very pleased with the profitability behind the wholesale model and the wholesale customers that are on our network today.

Kevin Rowe - Rowe Equity Research

When you mention targets, ISPs, fixed line, consumer electronics, are additional wireless mobile operators on that list too of targets?

William Morrow

We do not discriminate. We will take anybody. Yes there are wireless carriers, fixed line carriers, consumer electronic companies, cable companies, satellite companies, we have a very aggressive team. As you saw in the announcement before we appointed a new President, Theresa Elder, who has great experience in cable and wireless and fixed line telecom in the past. She has assembled a team that is out there quite aggressive and the thing I would say here which is most exciting for us is that it used to be us banging on their door. It has turned around completely where they are knocking on our door asking if we can come out and talk to them about what a wholesale arrangement might look like for them. This is a real business and it is ramping up pretty well.

I think that wraps up the questions. Let me just again thank all of you for your time and let you know the management team is jazzed. We are really coming together as a group. We have often talked about going from a team of champions to a championship team and I hope you see that. Our execution is coming together. Our outlook for the future is really bright. We are motivated. We are pumped up and I hope you stay with us.

Operator

Thank you for joining today’s conference. This concludes the presentation. You may now disconnect. Good day.

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Source: Clearwire Corporation Q4 2009 Earnings Call Transcript
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