Clearwire CFO Highlights Value Of Spectrum

Clearwire stock may not be getting enough credit for its spectrum leases.

Wells Fargo Analyst Jennifer M. Fritzsche writes, after hearing Clearwire CFO Hope Cochran at an investor conference, that Clearwire (CLWR) doesn’t have much capacity for debt issuance, and could sell leases. Fritzche writes,

“Leased spectrum might not be attractive to companies that don’t like to expense their spectrum and are more concerned about margin, but the benefit of leased spectrum is that it isn’t included in spectrum caps so it might be easier for bigger carriers to acquire it.”

Shares of Clearwire are up 7 cents, or nearly 5%, to $1.51.

Fritzsche also noted:

• Clearwire LTE spending has begun with roughly $600 million in total expenditures expected over the next year and a half; 1,800 sites are ready to be built. Clearwire anticipates vendor financing will be in place when LTE equipment purchases are made.
• CFO Cochran “highlighted the value of its spectrum and the likelihood that CLWR will never use all of the 160MHz and the possibility of a sale” of some of its excess spectrum.
• On the subject of Dish ownership of Clearwire debt, “Clearwire can’t confirm who owns its securities but Cochran can confirm that Dish has not told Clearwire that it is an owner.”
• 60% of the 196 megahertz of the 2.5 gigahertz band is leased with 30-year terms and the average life of a Clearwire lease is 23 – 24 years and “CLWR views it as owned spectrum.” With more than 1,000 owners, no one owner has too much leverage.

While wholesale customers transition to LTE, they may generate WiMAX network revenue with a longer tail than expected, FierceWireless noted earlier this month. Clearwire has been signing wholesale deals for consumer mobile WiMAX and LTE services.

Fritzsche has an Outperform rating on Clearwire, and a Market Weight on the wireless carrier sector.

Time Warner Cable (TWC) said it is selling its stake in Clearwire, which we blogged about earlier this week.