T-Mobile's MetroPCS expects to see boost from AT&T's Leap acquisition
T-Mobile US (NYSE:TMUS) prepaid unit MetroPCS expects to see benefits from AT&T Mobility's (NYSE:T) purchase of Leap Wireless (NASDAQ:LEAP) and Leap's Cricket prepaid brand, according to a senior MetroPCS executive. If that notion seems paradoxical--a major competitor moving more aggressively into the prepaid market actually being a positive development--Tom Keys, executive vice president and COO of T-Mobile's MetroPCS unit, does not seem to think so.
In an interview with FierceWireless, Keys said that AT&T's talk of using the Cricket brand to be more aggressive in the price-sensitive part of the market is just that at this point--rhetoric. He noted that AT&T will have to rebrand its Aio Wireless stores and work with dealers to move them over to Cricket. Meanwhile, MetroPCS just announced it is moving into 15 new markets beginning Nov. 21.
"Cricket's problem is they operated in secondary and tertiary markets," Keys said. He said MetroPCS has "every confidence in the world that we have the right model. The more that AT&T legitimizes this space, the better it is for us, because more people will be drawn to it, like moths to a flame."
AT&T CFO John Stephens said last month during the company's third-quarter earnings conference call that AT&T will "use that Cricket brand and infrastructure to really take advantage of that marketplace in a different way with different capabilities than we have today, and that's what's real positive for us."
Starting Nov. 21, MetroPCS is moving into Albuquerque-Santa Fe and Las Cruces, N.M.; Cincinnati, Columbus and Dayton, Ohio; Denver-Colorado Springs, Colo.; El Paso Texas; Fayetteville, Ark.; Indianapolis; Louisville-Jefferson County, Ky.; Oklahoma City; Phoenix; Pittsburgh; Portland, Ore.; South Bend-Fort Wayne, Ind.; Tucson, Ariz.; and Tulsa, Okla.
When MetroPCS expanded to 15 new markets in September, it expanded its footprint by 38 to 40 million additional POPs (fewer than the 50 million it had initially advertised), Keys said. He said the new market expansions will add around 26 million covered POPs to the MetroPCS footprint, bringing the brand's total footprint to 168-170 million POPs, up from 104 million POPs before MetroPCS' merger with T-Mobile closed in May. He said that MetroPCS has accelerated the expansion based on how the September rollout went, and that its objective is to crack 200 million POPs covered by MetroPCS sometime in 2014.
T-Mobile disclosed Tuesday that 1.5 million MetroPCS customers have moved over to its HSPA+/LTE network. Keys reiterated that by the end of this year, MetroPCS will essentially stop selling CDMA handsets and will move aggressively to migrate customers onto T-Mobile's network so it can decommission legacy CDMA equipment and refarm Metro's AWS spectrum for T-Mobile's LTE service. He said that push will accelerate into the first quarter of 2014, and that MetroPCS still expects the migration to be complete by the end of 2015.
The faster MetroPCS can move its legacy CDMA customers onto T-Mobile's network, the faster the company can repurpose those airwaves. Keys said that once a market is turned down this can happen in a "very short period of time," as carriers are switched over. T-Mobile now has LTE service in 94 of the top 100 markets and 10x010 MHz LTE in 40 of the top 50 markets, and plans to eventually cover 90 percent of the top 25 markets with 20x20 MHz LTE. T-Mobile CTO Neville Ray said that 20x20 MHz rollout will include "substantial" deployments in 2014.
Keys noted that he is working with handset makers to develop affordable LTE handsets for the more than 7 million customers left on Metro's legacy network, so that when they do migrate to the T-Mobile network they will be able to slide into affordable devices.
Maintaining affordability and simplicity has been key in the new markets Metro has pushed into, Keys said. He noted that it took a few weeks for dealers and stores to gain traction but that moving to a GSM-based network, even if it's just HSPA+ and not T-Mobile's LTE network, has provided customers with faster speeds and more reliable service. Metro has also been aggressively pushing its $40 plan, which includes unlimited voice, texting and 500 MB of LTE data. Keys also said that the carrier's bring-your-own-device plan has proved successful, and in some markets as much as 10 percent of Metro's gross subscriber additions come from the BYOD plan.
Interestingly, Keys said MetroPCS does not, at this point, have any plans to offer tablets. "I'm not sure we're the right player," he said. "The jury is still out on the economics."
And when might MetroPCS start selling the iPhone in its stores? Keys said customers can port iPhones onto its network through the BYOD program, but that "we have yet to come to terms that make sense for Metro to bring in the [iPhone] inside of our doors." He said though that MetroPCS kicks the idea around every three to four weeks.
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