Clearwire Reports First Quarter 2009 Results

Clearwire Corporation (NASDAQ: CLWR) (along with its subsidiaries, “Clearwire” or the “Company”), a leading provider of wireless broadband services, today reported its unaudited consolidated condensed financial and operating results for the first quarter ended March 31, 2009.

“It is a pivotal time for Clearwire as we begin to significantly scale our operational capabilities, gain merger integration synergies, leverage key partnerships and ramp up our network construction and deployment activities to an unprecedented rate,” said William T. Morrow, chief executive officer of Clearwire. “We are ushering in the next-generation of services providing a rich and unconstrained digital experience by delivering broadband Internet access through a quickly growing array of new devices and applications that take advantage of speed and mobility in exciting, unanticipated ways. As we extend our network to many more cities during the next two years, we believe CLEAR will be the first truly pervasive mobile broadband service, unlocking the true potential of the Internet for our customers and providing Clearwire tremendous opportunities for long-term growth.”

“Our network development work is ramping well as we work toward launching our CLEAR branded mobile broadband services in a number of new markets this year including Atlanta in June, Las Vegas this summer and Chicago, Philadelphia and Dallas/Ft. Worth later in the year. We also plan to upgrade our largest existing markets – namely Baltimore, Seattle, Honolulu and Charlotte during 2009,” Morrow continued. “Leveraging our robust pipeline of more than 19,000 cell sites under various stages of design and development, we are planning to significantly extend our wireless 4G network enabling us to potentially cover as many as 120 million people with true broadband mobility across 80 cities by the end of 2010.”

During the first quarter Clearwire announced plans to introduce a “WiMAX Innovation Network” to Silicon Valley developers to accelerate next generation mobile Internet application development. Expected to launch in late summer, the WiMAX Innovation Network will initially cover more than 20 square miles in Silicon Valley and bring 4G wireless service to the campuses of some of the world’s leading technology innovators including early participants Google Inc. and Intel Corporation.

Clearwire also announced today an alliance with Cisco designed to enhance and expand CLEAR 4G mobile WiMAX services throughout the United States. Under terms of the agreement, Clearwire has selected Cisco as its national Internet Protocol Next-Generation Network (IP NGN) core infrastructure provider, and Cisco has announced plans to build new mobile WiMAX devices for the CLEAR 4G mobile WiMAX services for the consumer, small office or home office (SOHO), and small and medium-sized business (SMB) markets.

“The WiMAX Innovation Network and our agreement with Cisco both serve to bring us closer to some of the most talented members of the Internet development community at a critical time in the development of the WiMAX ecosystem,” added Morrow. “As we look back and celebrate the 500,000 customer milestone, we are also looking ahead at the tremendous opportunity we have to enhance the way the Internet affects our daily lives.”

Business Outlook

Clearwire maintained its business outlook for 2009 and 2010, expecting ARPU to be generally sustained over this period of significant development and expansion of its wireless 4G network. The Company continues to anticipate that Churn will increase in its pre-WiMAX markets as the Company transitions these networks to mobile WiMAX technology and that CPGA will increase as new markets are launched, consistent with Clearwire’s past operating experience.

Clearwire continues to target total net cash spend in the range of $1.5 to $1.9 billion for 2009. As announced in March, Clearwire is currently engaged in the development and construction of mobile WiMAX networks, as well as the long lead time cell site development work, to give the Company the ability to cover as many as 120 million people by the end of 2010. The ultimate scope and timing of Clearwire’s network build-out will largely be driven by the Company’s market by market success and the availability of additional capital.

Presentation of Unaudited 2009 First Quarter and Pro Forma First Quarter 2008 Results

As previously disclosed, on November 28, 2008, Clearwire, Sprint Nextel Corporation, Comcast Corporation, Time Warner Cable, Inc., Bright House Networks, LLC, Google Inc. and Intel Corporation completed the transactions contemplated by the Transaction Agreement and Plan of Merger (the “Transaction Agreement”), entered into by the parties on May 7, 2008. For accounting purposes, the transactions (the “Transactions”) are treated as a “reverse acquisition” with the WiMAX business contributed from Sprint (the “Sprint WiMAX Business”) deemed to be the accounting acquirer. As a result, the financial results of the legacy Clearwire Corporation (“Old Clearwire”) prior to the consummation of the Transactions are not included as part of the Company’s consolidated condensed financial statements. The results for Clearwire for the first quarter ended March 31, 2009 are presented with the results of operations of the Sprint WiMAX Business for the quarter ended March 31, 2008 on a subsequent page of this earnings release.

In order to facilitate the most useful comparative analysis between periods, the following table summarizes Clearwire’s first quarter ended March 31, 2009 consolidated results versus the Pro Forma Financial Data for the three month period ended March 31, 2008. The Pro Forma Financial Data has been derived from the unaudited pro forma condensed combined statement of operations of Clearwire for the quarter ending March 31, 2008. The unaudited pro forma condensed combined statement of operations of Clearwire gives effect to the Transactions as if they were consummated on January 1, 2008, and is based upon the financial results for both Old Clearwire and the Sprint WiMAX Business for the relevant period. A full presentation of the unaudited pro forma condensed combined statements of operations for the quarter ended March 31, 2008, and accompanying notes, are provided on subsequent pages of this release. The unaudited condensed combined pro forma statement of operations is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have been obtained had the Transactions actually been consummated on January 1, 2008, nor is it intended to be a projection of future results of operations.

Note: For a definition and reconciliation of non-GAAP financial measures, including Adjusted OIBDA, ARPU, Churn, and CPGA, please refer to the section titled “Definition of Terms and Reconciliation of Non-GAAP Financial Measures to Unaudited Condensed Consolidated Statements of Operations” at the end of this release.

2009 First Quarter Consolidated Results

Consolidated Revenue increased by 21 percent to $62.1 million in the first quarter 2009, versus pro forma revenue of $51.5 million for the same quarter of 2008. The growth in Revenue was driven primarily by Clearwire’s larger subscriber base, which has increased to approximately 500,000 at the end of the first quarter 2009, up from approximately 443,000 at the end of the first quarter 2008. New subscriber growth in mobile WiMAX markets as well as in the Company’s pre-WiMAX markets resulted in the approximately 25,000 net new subscribers during the first quarter. Clearwire expects net new subscribers in the second quarter 2009 will likely be lower on a sequential quarter basis due to the same seasonal increase in churn and reduction in gross subscriber additions that the Company has experienced historically in its pre-WiMAX markets.

Consolidated Average Revenue Per User (or ARPU) for the first quarter 2009 was $39.52, an increase of $2.66 above the $36.86 pro forma ARPU level from the prior year first quarter. ARPU growth was driven by a reduction in promotional pricing year over year, as well as increased bundled sales of new services, that include our Voice over Internet Protocol (or VoIP), PC Card or other ancillary services.

Cost of goods and services and network costs for the first quarter ended March 31, 2009 increased 13 percent to $73.6 million compared to pro forma cost of goods and services and network costs of $65.0 million in the prior year period due to higher backhaul and tower rent expense in preparation for future market launches.

Selling, General and Administrative (SG&A) expense decreased to $108.5 million in the first quarter 2009 compared to pro forma $139.8 million for the first quarter 2008 as a result of G&A related cost synergies gained following the combination of Old Clearwire with the Sprint WiMAX Business. The cost synergies were partially offset by higher sales and marketing expense related to the launch of the Portland market in early January.

Adjusted OIBDA for the first quarter 2009 reflected a loss of $144.0 million, versus a pro forma Adjusted OIBDA loss of $163.2 million for the same period in 2008. The decreased Adjusted OIBDA loss compared to the year-ago quarter was driven primarily by the significant decrease in SG&A expense year over year described above.

Capital Expenditures (or CapEx) decreased to $112 million in the first quarter 2009 from pro forma CapEx of $312 million in the same period in 2008, but increased on a sequential quarter pro forma basis from $83 million in the fourth quarter 2008. Clearwire expects quarterly CapEx to be higher than first quarter CapEx throughout the remainder of 2009 due to increased network expansion activities. Pro forma CapEx in the first quarter 2008 was primarily incurred by the Sprint WiMAX Business toward network development activities.

Net cash spend, which represents the change in cash and short-term investment balances, was $272 million for the first quarter. Clearwire ended the first quarter 2009 with cash and short-term investments of over $2.8 billion invested primarily in U.S. Treasury securities.

Management Webcast

Clearwire’s senior leadership team will discuss the company’s 2009 first quarter performance during a conference call and simultaneous webcast at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) today. The call is expected to last approximately 45 minutes. To access today’s conference call, please call 800-798-2801, or outside the United States please call 617-614-6205. The conference call passcode is 87239806. The simultaneous webcast can be accessed via the Internet at http://investors.clearwire.com. The conference call will be archived and available for replay until midnight Eastern Time (9 p.m. Pacific Time), on May 27, 2009. To access the replay, please call 888-286-8010, or outside the United States dial 617-801-6888. The replay passcode is 67223688.

About Clearwire

Clearwire Communications, LLC, an operating subsidiary of Clearwire, offers a robust suite of advanced high-speed Internet services to consumers and businesses. As part of a multi-year network build-out plan, Clearwire’s 4G service, called CLEAR™, will be available in major metropolitan areas across the U.S., and bring together an unprecedented combination of speed and mobility. Clearwire’s open all-IP network, combined with significant spectrum holdings, provides unmatched network capacity to deliver next generation broadband access. Strategic investors include Intel Capital, Comcast, Sprint, Google, Time Warner Cable, and Bright House Networks. Clearwire currently provides 4G service, utilizing WiMAX technology, in two markets and provides pre-WiMAX communications services in 50 markets across the U.S. and Europe. Headquartered in Kirkland, Wash., additional information about Clearwire is available at www.clearwire.com.

Forward-Looking Statements

This release, and other written and oral statements made by Clearwire from time to time, contains forward-looking statements which are based on management’s current expectations and beliefs, as well as on a number of assumptions concerning future events made with information that is currently available. Forward-looking statements may include, without limitation, management’s expectations regarding: future financial and operating performance and financial condition; proposed transactions; network development and market launch plans; strategic plans and objectives; industry conditions; the strength of the balance sheet; and liquidity and financing needs. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside of Clearwire's control, which could cause actual results to differ materially and adversely from such statements. Some factors that could cause actual results to differ are:

• We are an early-stage company with a history of operating losses and we expect to continue to realize significant net losses for the foreseeable future.
• Our business plan will require us to raise substantial additional financing both in the near term and long term, and if we are unable to raise such financing we may need to modify our business plan accordingly, such as making material adjustments to our current network expansion plans, including potential delays in the timing or decreases in the scope of expansion.
• We may fail to realize all of the anticipated benefits of the transactions with Sprint and the strategic investors.
• We are committed to using commercially reasonable efforts to deploy wireless broadband networks based solely on mobile WiMAX technology, even if there are alternative technologies available in the future that are technologically superior or more cost effective.
• We currently depend on our commercial partners to develop and deliver the equipment for our pre-WiMAX and mobile WiMAX networks.
• Many of our competitors are better established and have significantly greater resources, and may subsidize their competitive offerings with other products and services.
• Our substantial indebtedness and restrictive debt covenants could limit our financing options and liquidity position and may limit our ability to grow our business.
• Sprint Nextel Corporation controls a majority of our combined voting power, and may have, or may develop in the future, interests that may diverge from other stockholders.
• Future sales of large blocks of our common stock may adversely impact our stock price.

For a more detailed description of the factors that could cause such a difference, please refer to Clearwire’s filings with the Securities and Exchange Commission, including the information under the heading “Risk Factors” in our Annual Report on Form 10-K filed on March 26, 2009. Clearwire assumes no obligation to update or supplement such forward-looking statements.

Basic and diluted net loss per common share amounts are not presented for the actual period ended March 31, 2008. Prior to the closing of the Transactions (the “Closing”), the Company had no equity as the Sprint WiMAX Business was a wholly-owned division of Sprint Nextel Corporation. The calculation of diluted net loss per common share assumes the hypothetical exchange of Class B common interests of Clearwire Communications LLC (“Clearwire Communications Class B Common Interests”) together with Class B common stock of Clearwire Corporation (“Clearwire Class B Common Stock”) for Clearwire Corporation’s Class A common stock (“Clearwire Class A Common Stock”) resulting in certain corresponding tax effects, an increase in the number of shares of Clearwire Class A Common Stock outstanding and the elimination of the non-controlling interest allocation.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

The unaudited pro forma condensed combined statements of operations that follows is presented for informational purposes only and is not intended to represent or be indicative of the combined results of operations that would have been reported had the Transactions been completed as of January 1, 2008 and should not be taken as representative of the future consolidated results of operations of the Company.

The following unaudited pro forma condensed combined statements of operations for the period ended March 31, 2008 were prepared under Article 11-Pro forma Financial Information of Securities and Exchange Commission Regulation S-X using (1) the unaudited accounting records of the Sprint WiMAX Business for the three months ended March 31, 2008; and (2) the unaudited consolidated financial statements of Old Clearwire for the three months ended March 31, 2008. The unaudited pro forma condensed combined statements of operations should be read in conjunction with these separate historical financial statements and accompanying notes thereto.

The following table provides a reconciliation from the actual results to the pro forma results presented above for the Company for the three months ended March 31, 2008 (in thousands):

Notes to Clearwire Corporation

Unaudited Pro Forma Condensed Combined Statement of Operations

1. Basis of Presentation

Sprint Nextel Corporation entered into an agreement with Old Clearwire to combine both of their next generation wireless broadband businesses to form a new independent company. On Closing, Old Clearwire and the Sprint WiMAX Business completed the combination to form Clearwire. The Transactions were accounted for under SFAS No. 141 as a reverse acquisition with the Sprint WiMAX Business deemed to be the accounting acquirer.

On the Closing, the Investors made an aggregate $3.2 billion capital contribution to Clearwire and its subsidiary, Clearwire Communications. In exchange for the contribution of the Sprint WiMAX Business and their investment, as applicable, Google initially received 25,000,000 shares of Clearwire Class A Common Stock and Sprint and the other Investors received 505,000,000 shares of Clearwire Class B Common Stock and an equivalent amount of Clearwire Communications Class B Common Interests. The number of shares of Clearwire Class A and B Common Stock and Clearwire Communications Class B Common Interests, as applicable, that the Investors were entitled to receive under the Transaction Agreement was subject to a post-closing adjustment based on the trading price of Clearwire Class A Common Stock on NASDAQ over 15 randomly-selected trading days during the 30-day period ending on the 90th day after the Closing, or February 26, 2009 (“the Adjustment Date”), with a floor of $17.00 per share and a cap of $23.00 per share. During the measurement period, Clearwire Class A Common Stock traded below $17.00 per share on NASDAQ, so on the Adjustment Date, we issued to the Investors an additional 4,411,765 shares of Clearwire Class A Common Stock and 23,823,529 shares of Clearwire Class B Common Stock and 23,823,529 additional Clearwire Communications Class B Common Interests to reflect the $17.00 final price per share. Additionally, in accordance with the subscription agreement, on February 27, 2009, CW Investment Holdings, LLC purchased 588,235 shares of Clearwire Class A Common Stock at $17.00 per share for a total investment of $10 million. For the purposes of determining the number of shares outstanding within the unaudited pro forma condensed combined statement of operations, we assumed that the additional shares and common interests issued to the Investors and CW Investment Holdings LLC on the Adjustment Date and February 27, 2009, respectively, were issued as of the Closing and that the Closing was consummated on January 1, 2008.

After giving effect to the Transactions, the post-closing adjustment and the investment by CW Investment Holdings LLC, Sprint owns the largest interest in Clearwire with an effective voting and economic interest in Clearwire and its subsidiaries of approximately 51 percent.

In connection with the integration of the Sprint WiMAX Business and Old Clearwire operations, we expect that certain non-recurring charges will be incurred. We also expect that certain synergies might be realized due to operating efficiencies or future revenue synergies expected to result from the Transactions. However, in preparing the unaudited pro forma condensed combined statement of operations which gives effect to the Transactions as if they were consummated on January 1, 2008, no pro forma adjustments have been reflected to consider any such costs or benefits.

2. Pro Forma Adjustments related to Purchase Accounting for the three months ended March 31, 2008

The pro forma adjustments related to purchase accounting have been derived from the preliminary allocation of the purchase consideration to the identifiable tangible and intangible assets acquired and liabilities assumed of Old Clearwire, including the allocation of the excess of the estimated fair value of net assets acquired over the purchase price. The allocation of the purchase consideration is preliminary and based on valuations derived from estimated fair value assessments and assumptions used by management. The final purchase price allocation is pending the finalization of appraisal valuations of certain tangible and intangible assets acquired. While management believes that its preliminary estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different values being assigned to individual assets acquired and liabilities assumed, and the resulting amount of the excess of estimated fair value of net assets acquired over the purchase price.

Article 11 of Regulation S-X requires that pro forma adjustments reflected in the unaudited pro forma statement of operations are directly related to the transaction for which pro forma financial information is presented and have a continuing impact on the results of operations. Certain charges have been excluded in the unaudited pro forma condensed combined statement of operations as such charges were incurred in direct connection with or at the time of the Transactions and are not expected to have an ongoing impact on the results of operations after the Closing.

a. Represents adjustments in the depreciation and amortization expense on a pro forma basis related to items of Old Clearwire property, plant and equipment that are being depreciated and amortized over their estimated remaining useful lives on a straight-line basis. The reduction in depreciation expense results from a decrease in the carrying value of Old Clearwire property, plant equipment due to the allocation of the excess of the estimated fair value of net assets acquired over the purchase price used in purchase accounting for the Transactions.

b. Represents adjustments to record amortization on a pro forma basis related to Old Clearwire spectrum lease contracts and other intangible assets over their estimated weighted average remaining useful lives on a straight-line basis. The increase in the amortization expense results from an increase in the carrying value of the Old Clearwire spectrum lease contracts and other intangible assets resulting from purchase accounting.

c. Represents the elimination of intercompany other income and related expenses associated with the historical agreements pre-Closing between the Sprint WiMAX Business and Old Clearwire where Old Clearwire leased spectrum licenses from the Sprint WiMAX Business. The other income and related expenses were $699,000 for the three months ended March 31, 2008.

d. Prior to the Closing, Old Clearwire refinanced the senior term loan facility and renegotiated the loan terms. Historical interest expense related to the senior term loan facility before the refinancing and amortization of the deferred financing fees recorded by Old Clearwire, in the amount of $28.4 million for the three months ended March 31, 2008 has been reversed as if the Transactions were consummated on January 1, 2008.

e. Represents the adjustment to record pro forma interest expense assuming the senior term loan facility, including the Sprint Pre-Closing financing (as defined in the Transaction Agreement) under the Amended Credit Agreement (as defined below), was outstanding as of January 1, 2008. The Closing would have resulted in an event of default under the terms of the credit agreement underlying the senior term loan facility unless the consent of the lenders was obtained. On November 21, 2008, Old Clearwire entered into the Amended and Restated Credit Agreement with the lenders to obtain their consent and to satisfy other conditions to closing under the Transaction Agreement (the “Amended Credit Agreement”). The Amended Credit Agreement resulted in additional fees to be paid and adjustments to the underlying interest rates. The Sprint Pre-Closing Financing was assumed by Clearwire on the Closing, as a result of the financing of the Sprint WiMAX Business operations by Sprint for the period from April 1, 2008 through the Closing, and added as an additional tranche of term loans under the Amended Credit Agreement.

Pro forma interest expense was calculated over the period using the effective interest method resulting in an adjustment of $47.2 million for the three months ended March 31, 2008 based on an effective interest rate of approximately 14.0 percent. Pro forma interest expense also reflects an adjustment to accrete the debt to par value. Pro forma interest expense was calculated based on the contractual terms under the Amended Credit Agreement, assuming a term equal to its contractual maturity of 30 months and the underlying interest rate was the LIBOR loan base rate of 2.75 percent, as the 3 month LIBOR rate in effect at the Closing was less than the base rate, plus the applicable margin. The calculation assumed a current applicable margin of 6.00 percent and additional rate increases as specified in the Amended Credit Agreement over the term of the loan. A one-eighth percentage change in the interest rate would increase or decrease interest expense by $427,000 for the three months ended March 31, 2008. Total interest expense on a pro forma basis does not include an adjustment for capitalized interest.

f. Represents the adjustment to reflect the pro forma income tax expense for the three months ended March 31, 2008, which was determined by computing the pro forma effective tax rates for the three months ended March 31, 2008, giving effect to the Transactions. Clearwire expects to generate net operating losses into the foreseeable future and thus has recorded a valuation allowance for the deferred tax assets not expected to be realized. Therefore, for the three months ended March 31, 2008, no tax benefit was recognized.

g. Represents the allocation of a portion of the pro forma combined net loss to the non-controlling interests in consolidated subsidiaries based on Sprint's and the Investors' (other than Google) ownership of the Clearwire Communications Class B Common Interests upon Closing of the Transactions and reflects the contribution by CW Investment Holdings LLC and the Investors at $17.00 per share following the post-closing adjustment. This adjustment is based on pre-tax loss since income tax consequences associated with any loss allocated to the Clearwire Communications Class B Common Interests will be incurred directly by Sprint and the Investors (other than Google and CW Investment Holdings LLC).

3. Pro Forma Loss per Share

The Clearwire combined pro forma net loss per share presented below assumes the closing of the Transactions, the Clearwire Class A and B Common Stock and Clearwire Communications Class B Common Interests issued to Sprint, the Investors and CW Investment Holdings LLC were outstanding from January 1, 2008 and reflects the resolution of the post-close price adjustment at $17.00 per share. The shares of Clearwire Class B Common Stock have nominal equity rights. These shares have no right to dividends of Clearwire and no right to any proceeds on liquidation other than the par value of Clearwire Class B Common Stock.

The following table presents the pro forma number of Clearwire shares outstanding as if the Transactions had been consummated on January 1, 2008 (in thousands):

(i) Shares outstanding related to Clearwire Class A Common Stock held by existing stockholders has been derived from the sum of the number of shares of Old Clearwire Class A Common Stock and Old Clearwire’s Class B Common Stock issued and outstanding at November 28, 2008, subject to conversion into the right to receive one share of Clearwire Class A Common Stock.

The basic weighted average shares outstanding related to Clearwire Class A Common Stock are the shares issued in the Transactions and assumed to be outstanding for the entire period for which loss per share is being calculated.

The computation of pro forma diluted Clearwire Class A Common Stock did not include the effects of the following options, restricted stock units and warrants as the inclusion of these securities would have been anti-dilutive (in thousands):

(ii) Holders of Clearwire Class B Common Stock will be entitled at any time to exchange one share of Clearwire Class B Common Stock, in combination with one Clearwire Communications Class B Common Interest, for one share of Clearwire Class A Common Stock.

Shares of Clearwire Class B Common Stock have no impact on pro forma basic net loss per share because they do not participate in net income (loss) or distributions. However, the hypothetical exchange of Clearwire Communications Class B Common Interests together with Clearwire Class B Common Stock for Clearwire Class A Common Stock may have a dilutive effect on pro forma diluted loss per share due to certain tax effects. As previously mentioned, that exchange would result in a decrease to the non-controlling interests and a corresponding increase in net loss attributable to the Clearwire Class A Common Stock. Further, to the extent that all of the Clearwire Communications Class B Common Interests and Clearwire Class B Common Stock are converted to Clearwire Class A Common Stock on a pro forma basis, the partnership structure is assumed to no longer exist and Clearwire would be required to recognize a tax charge related to indefinite lived intangible assets. Net loss available to holders of Clearwire Class A Common Stock, assuming conversion of the Clearwire Communications Class B Common Interests and Clearwire Class B Common Stock, is as follows (in thousands):

The pro forma net loss per share available to holders of Clearwire Class A Common Stock on a basic and diluted basis is calculated as follows (in thousands, except per share amounts):

Definition of Terms and Reconciliation of Non-GAAP Financial Measures to Unaudited Condensed Consolidated Statements of Operations

The company utilizes certain financial measures which are widely used in the telecommunications industry and are not calculated based on accounting principles generally accepted in the United States of America (GAAP). Certain of these financial measures are considered non-GAAP financial measures within the meaning of Item 10 of Regulation S-K promulgated by the SEC. Other companies may calculate these measures differently.

(1) Adjusted OIBDA is a non-GAAP financial measure. Adjusted OIBDA is defined as consolidated operating loss less depreciation and amortization expenses, non cash expenses related to capital assets (towers, spectrum leases and buildings) and stock-based compensation expense. A reconciliation of operating loss to Adjusted OIBDA is as follows:

In a capital-intensive industry, management believes Adjusted OIBDA, as well as the associated percentage margin calculation, to be meaningful measures of the company’s operating performance. We provide Adjusted OIBDA as a supplemental performance measure because management believes it facilitates comparisons of the company’s operating performance from period to period and comparisons of the company’s operating performance to that of other companies by backing out potential differences caused by non-cash expenses related to long-term capital assets and leases, and share-based compensation. Because Adjusted OIBDA facilitates internal comparisons of our historical operating performance, management also uses Adjusted OIBDA for business planning purposes and in measuring our performance relative to that of our competitors. In addition, we believe that Adjusted OIBDA and similar measures are widely used by investors, financial analysts and credit rating agencies as a measure of our financial performance over time and to compare our financial performance with that of other companies in our industry.

A Reconciliation of Adjusted OIBDA to cash flows used in operations is as follows:

(2) ARPU is revenue, less acquired businesses revenue (revenue from entities that were acquired by Old Clearwire) less the revenue generated with the sales of devices less shipping revenue divided by the average number of subscribers in the period divided by the number of months in the period.

Management uses ARPU to identify average revenue per customer, to track changes in average customer revenues over time, to help evaluate how changes in our business, including changes in our service offerings and fees affect average revenue per customer, and to assist in forecasting future service revenue. In addition, ARPU provides management with a useful measure to compare our customer revenue to that of other wireless communications providers. We believe investors use ARPU primarily as a tool to track changes in our average revenue per customer and to compare our per customer service revenues to those of other wireless communications providers.

(3) Churn, which measures customer turnover, is calculated as the number of subscribers that terminate service in a given month divided by the average number of subscribers in that month using the actual number of subscribers or the pro forma number of subscribers, as applicable. Subscribers that discontinue service in the first 30 days of service for any reason, or in the first 90 days of service under certain circumstances, are deducted from our gross customer additions and therefore not included in the churn calculation.

Management uses churn to measure retention of our subscribers, to measure changes in customer retention over time, and to help evaluate how changes in our business affect customer retention. We believe investors use churn primarily as a tool to track changes in our customer retention. Other companies may calculate this measure differently.

(4) CPGA (Cost per Gross Addition) is selling, general and administrative costs less general and administrative costs and acquired businesses costs, plus devices equipment subsidy, divided by gross customer additions in the period.

Management uses CPGA to measure the efficiency of our customer acquisition efforts, to track changes in our average cost of acquiring new subscribers over time, and to help evaluate how changes in our sales and distribution strategies affect the cost-efficiency of our customer acquisition efforts. We believe investors use CPGA primarily as a tool to track changes in our average cost of acquiring new subscribers.