MetroPCS to launch at least one VoLTE handset in second half of 2012

Tools

MetroPCS (NASDAQ:PCS) CEO Roger Linquist said the flat-rate carrier will launch at least one handset capable of Voice over LTE service in the second half of the year. The MetroPCS chief made the comments during the carrier's quarterly analyst conference call to discuss the company's relatively strong fourth quarter results.

MetroPCS has previously discussed moving to VoLTE technology as a way to more efficiently use its spectrum. Currently, the carrier's voice calls travel over its CDMA network. A number of other, rival carriers have also discussed moving to VoLTE. For example, Verizon Wireless (NYSE:VZ) has said it will deploy it in late 2012 or early 2013.

Reiterating a point the company has made many times, Linquist said that by the second half of the year MetroPCS will begin to offer LTE smartphones that range from $99 to $149 as part of the company's "LTE for all" marketing strategy. "We are quite simply moving the industry in the direction of low-cost 4G LTE handsets," he said. As the prices of chipsets and other components fall, Linquist said the company will be able to offer LTE devices to a wider range of the company's customers, thereby migrating them over to the carrier's more spectrally-efficient LTE network.

MetroPCS expects to spend between $900 million and $1 billion on capital expenditures, flat from the guidance it had for 2011. MetroPCS increased its capex spending in the second half of last year to boost capacity on its CDMA network. MetroPCS CFO Braxton Carter said that the company will look to deploy LTE across its entire footprint by year-end, but that most of that work and capex spending will be weighted toward the first half of the year. COO Tom Keys said that MetroPCS will continue to add EV-DO capacity to highly congested cell sites where necessary.

Here is a breakdown of MetroPCS' key quarterly metrics:

Spectrum: Carter noted that several potential opportunities for MetroPCS to acquire spectrum have been closed off, noting regulators' decision to block LightSquared from launching, the collapse of AT&T's (NYSE:T) $39 billion acquisition of T-Mobile USA and Verizon Wireless' (NYSE:VZ) intention to spend $3.9 billion for AWS spectrum from cable companies. However: "That doesn't mean that there's not a lot of other options out there," he said. Although Congress authorized the FCC to conduct incentive auctions of broadcast TV spectrum, Carter said that spectrum is years away from being put to use. "We're looking at all of the natural suspects. We continue to work all options. This is important." In the past, MetroPCS has said it remains open to buying 2.5 GHz spectrum from Clearwire (NASDAQ:CLWR) or using Clearwire's forthcoming TD-LTE network as an overlay.

Smartphones: Fully 35 percent of MetroPCS' subscriber base are on smartphone plans, the company said. Keys said 40 percent of the devices MetroPCS sold in the fourth quarter ran Android and 38 percent of its device sales throughout 2011 were Android. Looking ahead to 2012, Keys said that six different OEMs are working on LTE smartphones for MetroPCS. He said the carrier expects to launch devices with 1.2 GHz dual-core processors, larger screens and 1900 mAh batteries. Interestingly, Keys also said that MetroPCS has been approached by multiple vendors about selling tablets, but has declined because a Wi-Fi-only tablet would be an expensive proposition for the carrier's customers, who he said aren't very interested in tablets. He said MetroPCS would be more interested in selling an LTE tablet and that 2013 might be a more appropriate time to do so.

Subscribers: MetroPCS, which released preliminary results for the quarter in early January, said it added around 197,000 net subscribers in the fourth quarter, better than the 69,000 it had in the third quarter but down from nearly 298,000 in the year-ago period. Overall in 2011 the company added 1.19 million customers and ended the year with 9.34 million total subscribers.

Financials: The carrier's net income for the quarter was $91 million, up from $14 million in the year-ago period. Total revenues came in at around $1.24 billion, up 16 percent year-over-year. MetroPCS' service revenue climbed 17 percent year-over-year to $1.13 billion. MetroPCS' adjusted EBITDA was a record $362 million for the quarter, up 15 percent from the $315 million it posted in the year-ago period.

Churn: MetroPCS' churn was 3.7 percent, up from 3.5 percent in the year-ago period but down from 4.5 percent in the third quarter. MetroPCS said the sequential decrease in churn was normal for this time of year, but also reflected customers' response to its upgrades to EV-DO network technology in specific areas. MetroPCS added EV-DO coverage to a portion of its cell sites in the second half of last year.

ARPU: The carrier's average revenue per user climbed 1.9 percent to $40.55, up from $39.79.

For more:
- see this release
- see this Dow Jones Newswires article (sub. req.)
- see this Reuters article

Special Report: Wireless in the fourth quarter of 2011

Related Articles:
MetroPCS slashes base LTE smartphone plan by $10, to $40/month
MetroPCS, Leap post sequential subscriber gains in Q4
MetroPCS still open to Clearwire's spectrum, will add more EV-DO
MetroPCS posts weaker Q3 net adds, but strong Android sales
MetroPCS promotion: unlimited everything for $25 (minimum of 4 lines)