MetroPCS expands LTE markets, adds 223K subs in Q3

Flat-rate carrier MetroPCS (NASDAQ:PCS) continues to attract more subscribers despite increasing competition from traditional operators' prepaid offerings. During the third quarter, MetroPCS added 223,249 net subscribers--an increase of 237 percent over the third quarter of 2009--bringing its total subscriber base to 7.8 million.

Financially, the carrier also fared well in the third quarter. MetroPCS' service revenues increased 16 percent to $942 million.

It was a busy quarter for the operator, which launched its first LTE markets in Las Vegas, Detroit and Dallas. Today the company announced the addition of LTE to Philadelphia and Los Angeles. During an earnings call with investors, executives said the company will continue to launch LTE in more markets in 2010 and 2011. In addition, Tom Keyes, chief operating officer at MetroPCS, hinted that the company will introduce its first 4G LTE Android-based device in 2011. Chairman, President and CEO Roger Linquist said the company's handset roadmap is not totally firm for 2011, but he expects MetroPCS to introduce about six LTE handsets next year. The operator currently offers the LTE Samsung Craft.

During the investor call, MetroPCS executives provided some additional insight on LTE. Linquist said subscribers are responding well to Metro Studio, the carrier's content offering powered by Real Networks. Linquist repeatedly noted that customers want their smartphones to become entertainment devices, and Metro Studio combined with LTE allows the company to deliver that.

In addition, Linquist said that the company will begin testing Voice over LTE in first quarter 2011 with plans to quickly migrate voice to VoLTE. "Once we move to VoLTE we expect cost savings to be achieved," he said.

He added that the company is seeing speeds over its LTE network that are similar to what Verizon (NYSE:VZ) has promised. Linquist said 8 Mbps is possible in ideal conditions, but speeds could drop to 2 Mbps indoors or in other poor signal conditions.

MetroPCS also announced it is offering nationwide coverage to its customers. Called Metro USA,  the service lets MetroPCS customers roam nationwide and still get unlimited talk, text and Web. Metro would not reveal its roaming partner, but company executives did say that they do not expect to see a significant increase in their costs from the deal. Linquist said that having nationwide coverage is more about perception than reality. "There was the perception that we were a regional or local service provider, and we wanted to dispel those thoughts."

In 2008, MetroPCS and Leap Wireless (NASDAQ:LEAP) inked a nationwide roaming deal with a 10-year term. However, in August Leap signed a 3G data roaming deal with Sprint Nextel (NYSE:S), making it an MVNO using Sprint's network.

Separately, MetroPCS is offering its customers a $10 per month discount on its $60 per month BlackBerry plan when they buy a BlackBerry Curve 8530. The discounted monthly price will last for up to one year from the date of activation. This is a limited time promotion and it is expected to end Jan. 2. 

Here are some key third quarter metrics:

Subscribers: MetroPCS added 223,249 subscribers, bringing its total subscriber base to 7.8 million. The company said that one-third of its subscribers were previously contract customers. At the end of third quarter MetroPCS had a market penetration of 8.1 percent based upon 97 million covered POPs.

Churn: Churn was 3.8 percent for the quarter, down from 5.8 percent at the end of third quarter 2009. Company executives attributed the decline to subscribers signing up for Metro's Wireless for All Service plans, as well as the carrier's elimination of a first month of service for free.

ARPU: Average revenue per user was $39.69, down from $41.08 at the end of the third quarter of 2009.

CPU: Cost per user increased to $18.47, up 7 percent over the same quarter in 2009. MetroPCS said the increase was due to an increase in handset subsidies.

For more:
- see this WSJ article (sub. req.)
- see this earnings release
- see this nationwide coverage release
- see this LTE market release
- see this FierceWireless Q3 earnings page

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