T-Mobile USA's proposed merger with MetroPCS (NYSE:PCS) does not signal the end of the MetroPCS brand. According to a MetroPCS executive, the transaction instead will allow MetroPCS to expand its brand nationwide using the T-Mobile network.
Speaking at the Wells Fargo Technology Media & Telecom Conference today, MetroPCS CFO Braxton Carter said that the combined company will become a leading value-focused multi-segment carrier that will continue to offer a broad range of products. In addition, he said that the deal will allow the MetroPCS brand to expand across the U.S., and tap markets where the prepaid flat-rate model does not currently exist, such as New Orleans and Minneapolis.
Carter also said that the combined company will allow MetroPCS to enter these markets and do it in a way that does not require the building of a new network or an investment in network infrastructure. "There are major markets that are underserved," he said.
Although Carter did not use the term mobile virtual network operator, it appears that MetroPCS may eventually operate like a branded MVNO service, with T-Mobile as the underlying network.
In early October, T-Mobile announced its plan to merge with MetroPCS. The deal will combine T-Mobile's 33.3 million customers with MetroPCS' 8.98 million customers, and T-Mobile will own 74 percent of the combined entity.
Carter also noted that T-Mobile USA is currently taking prepaid customers away from MetroPCS. T-Mobile today announced its third-quarter earnings, in which it noted that it added 365,000 net prepaid customers. Carter said that MetroPCS has been less focused on growth as it made no sense to continue to push customers to its 1xEVDO Android smartphones when it really wanted to entice them to instead migrate to the company's LTE network.
However, MetroPCS is expected to see more growth with to its LTE customer base thanks to new LTE smartphones at more affordable rates in the $100 range. "We have more than 1.25 million customers on our LTE network. We are seeing very rapid uptake to LTE," he noted.
The company is expecting to see a lot more customers upgrade their devices in the fourth quarter and the first quarter of next year. Carter said that last year in the fourth quarter about 13 percent of the base upgraded to a new handset. This year he expects that to grow to about 18 percent.
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