MetroPCS (NYSE:PCS) posted significant gains in revenue, adjusted EBITDA and churn, but the carrier lost a whopping 312,291 customers during its third quarter. Indeed, MetroPCS' subscriber base has shrunk from around 9.15 million people a year ago to 8.98 million people at the end of the third quarter.
Click here for key slides from MetroPCS' third quarter earnings presentation.
Company executives promised to reverse the trend: "With a primary focus on generating adjusted EBITDA and cash flow during the third quarter, we are pleased to report the highest adjusted EBITDA margin in company history of 41.5 percent," said Roger Linquist, CEO of MetroPCS. "During the fourth quarter, we plan to focus on re-energizing subscriber growth, which we expect will put incremental pressure on our CPGA (cost per gross addition) and CPU (cost per user)."
During MetroPCS' earnings conference call, Linquist said MetroPCS will launch Rich Communication Services technology starting tomorrow. He said the technology will be available on one handset tomorrow and will expand to 10 by Nov. 15. The carrier previously promised to launch RCS sometime this fall.
Linquist said that RCS will support "social presence, simultaneous voice communication with multimedia messaging as well as other advanced data services."
"We will have a platform whereby most people who use their PC for Skype or for video calling, that is one of the features that we call VoWiFi, or voice over Wi-Fi, that will be available to these handsets with RCS with a client downloaded over the top," explained Linquist. "So what we have is really a portable video calling device within the Wi-Fi range. And I think that's a very exciting service that will attract additional customers that can have chats that can range from one to many users on a single call."
A MetroPCS spokesman was not immediately available to clarify Linquist's comments or answer additional questions on the topic, but said the carrier plans to release additional details on the RCS launch tomorrow.
Hanging over MetroPCS' results is the company's pending transaction with T-Mobile USA. Earlier this month T-Mobile parent Deutsche Telekom announced a transaction that will result in the merging of T-Mobile and MetroPCS into an independent, publicly traded wireless carrier with around 42 million total subscribers.
MetroPCS' Linquist said the transaction will result in a combined carrier with greater spectrum depth, wider network reach, improved distribution and better financial position. The carriers expect the transaction to close in the first half of next year.
Here are some key metrics from Metro's quarter:
Subscribers: MetroPCS lost 312,291 customers during the quarter to end the period with 8,979,960 subscribers. The carrier said it now counts around 1.25 million LTE subscribers representing 12 percent of its subscriber base. Executives said 40 percent of MetroPCS' gross additions were to its LTE network, and that in October around 70 percent of its subscribers' handset upgrades were to LTE phones.
Smartphones: Executives said 62 percent of the phones MetroPCS sold in the third quarter were smartphones, and that around 50 percent of the carrier's customer base now use smartphones. MetroPCS recently introduced the Samsung Galaxy S III Android smartphone, Samsung's flagship device.
LTE data use: Executives said that MetroPCS subscribers on the carrier's unlimited LTE data plans use between 2 GB and 2.5 GB per month on the carrier's cellular network. That figure does not include usage on Wi-Fi networks or roaming use.
Financials: The carrier's revenues totaled $1.3 billion, an increase of 4 percent over the third quarter of 2011. The carrier's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) clocked in at $466 million, an increase of 42 percent over the third quarter of 2011. MetroPCS' net income for the quarter was $193 million. Metro said its finances rose due to a securities settlement and lower costs.
ARPU: Metro's average revenue per user hit $40.50 in the third quarter, a decrease of $0.30 over the third quarter of 2011.
Churn: The carrier's churn decreased from 4.5 percent to 3.7 percent in the same quarter a year ago.
Special Report: Wireless in the third quarter of 2012
T-Mobile, MetroPCS ask FCC for deal approval
MetroPCS launches promotional $30 LTE plan with 250 MB of data
Jarich: MetroPCS, T-Mobile and the question of 'culture'
T-Mobile USA and MetroPCS merge: Complete coverage