MetroPCS sets sights on smartphones, LTE for 2011 growth

Flat-rate carrier MetroPCS (NASDAQ:PCS) added 298,000 net subscribers in the fourth quarter and saw an uptick in revenue. The company said it will look to smartphones running Google's (NASDAQ:GOOG) Android platform for growth as well as its LTE network, which is now live in 13 markets.

MetroPCS COO Tom Keys said during the company's earnings conference call that the company's "Wireless For All" plans, which include all applicable taxes and fees in the retail price, helped drive solid subscriber growth this year. Fully 84 percent of the company's subscriber base has migrated to the new plans, and Keys called it the company's "single-largest product transformation." The plans, which were introduced in January 2010, helped MetroPCS grow its subscriber base from 6.63 million at the end of 2009 to 8.1 million subscribers at the end of 2010.

Smartphones: The carrier also is going to put a much greater emphasis on smartphones going forward. "We think feature phones are dead," Keys said on the call. The company recently introduced its first Android LTE smartphone, the Samsung Galaxy Indulge, and plans more LTE handsets for 2011. Keys said higher-end LTE handsets carry a higher subsidy cost for MetroPCS, but they also increase brand awareness. MetroPCS CEO Roger Linquist said, however, that the company does not expect to sell meaningful LTE smartphone volumes until 2012.

LTE:  MetroPCS executives declined to comment on how many LTE subscribers the company has or what kind of momentum it is seeing in the market. CFO Braxton Carter said the shift to LTE is not "transformational" but "evolutionary" and will take some time. Carter said MetroPCS is supportive of LightSquared's planned wholesale LTE network, but declined to say whether MetroPCS had inked a deal with the company. "If there are opportunities for us outside our footprint to take advantage of a 4G LTE build from a roaming perspective, we are supportive of that," he said.

Linquist added that the company is "confident we can effectively and efficiently evolve our network to support" increasing data demands. He also hinted that MetroPCS might deploy next-generation LTE network architecture to keep up with the demand, but that the company is primarily focused on expanding LTE coverage to meet customer expectations.  

Linquist's comments are notable because rival Leap Wireless (NASDAQ:LEAP) recently said it plans to introduce session-based data later this year in order to meet users' data demands. Leap also said that, if users begin to stretch the bounds of its network capacity, it could offload traffic onto the network of its roaming partner Sprint Nextel (NYSE:S).

Here is a breakdown of MetroPCS' key quarterly metrics:

Subscribers: MetroPCS netted 298,000 subscriber additions in the quarter, down from 317,000 it had in the year-ago quarter but up from the 223,000 subscriber additions it had in the third quarter of 2010. The carrier ended the year with around 8.1 million total subscribers.

Financials: The company reported a net profit of $14 million, down 59 percent from the $33 million in profit it had in the year-ago period--due mainly to $60 million in charges it booked. However, the company's results beat Wall Street expectations, according to a poll of analysts by Thomson Reuters. MetroPCS said total revenue in the quarter clocked in at $1.07 billion, up 15 percent from the $930 million in recorded in the year-ago period. Service revenue jumped to $972 million, up from $825 million in the fourth quarter of 2009. 

Churn: Churn fell to 3.5 percent, down from 5.3 percent in the year-ago quarter, and down from 3.8 percent in the third quarter of 2010.

ARPU: Average revenue per user dipped to $39.79, down from $40.70 in the year-ago period but up slightly from the third quarter of 2010.

For more:
- see this release
- see this Dow Jones Newswires article (sub. req.)
- see this Reuters article
- see this FierceWireless Q4 earnings page

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