MetroPCS Seen Posting Impressive 1Q Subscriber Additions
07 April 2009 - 7:55AM
Dow Jones News
MetroPCS Communications Inc. (PCS) is slated to release early
Tuesday preliminary customer growth data that could surprise many
with its strength and put it on par with top-tier wireless
carriers.
MetroPCS' net new wireless customer additions could prove to be
a game-changer if the small pre-paid service provider shockingly
surpasses several of the national players. Early data already point
to the company having a strong quarter relative to its larger
peers, according to industry observers. While MetroPCS releases the
numbers on Tuesday, results from the other carriers won't be out
until later this month.
It's a development that underscores a shift in customers
actively looking to get away from the strings of a long-term
contract and save money.
"The trend is that folks with landlines and cellphones are
collapsing their plans into a single $40 to $50 unlimited plan,"
said Romeo Reyes, an analyst at Jefferies & Co. "If you're in a
local area, this is a great product. You're saving $70 a
month."
Wall Street analysts, on average, projected 554,000 net new
customers for MetroPCS, although many believe the actual figure
will be higher.
A spokesman for MetroPCS couldn't immediately be reached for
comment.
Verizon Wireless - jointly owned by Verizon Communications Inc.
(VZ) and Vodafone Group Plc (VOD) - and AT&T Inc. (T) have
consistently been the leaders in the wireless industry, but the
pre-paid players have slowly encroached upon their position. Leap
Wireless Inc. (LEAP) and MetroPCS have already overtaken Sprint,
and most eye Deutsche Telekom AG (DT) unit T-Mobile as the next to
be passed.
"MetroPCS may be close to T-Mobile," said William Power, an
analyst at Robert W. Baird & Co. "They've faltered a bit in the
last couple of quarters."
Power added he would be surprised if AT&T and Verizon
Wireless got passed. While the major carriers are seeing a more
mature business, they still have the size, reach and existing
distribution channels to keep their lead.
Spokesmen for T-Mobile USA and AT&T declined to comment.
Verizon Wireless spokeswoman Brenda Raney said the competition has
been around for a long time, and that the company has continued to
successfully fend off its rivals.
MetroPCS and Leap are helped by their aggressive expansions into
multiple new markets. Both companies offer calling plans in the $40
to $50 range that offer unlimited minutes and text messages, but
restricted by geography. The companies are making a lot of noise in
a key cites, as illustrated by MetroPCS' splashy launch in New York
City and Boston.
Leap, meanwhile, is expected by analysts to post 420,000 net new
customers helped by their launch in Chicago and Philadelphia.
"The footprint advantage AT&T and Verizon had a year ago is
going away," Reyes said, calling the expansion a "game-changer" for
Leap and Metro because their combined footprint quadruples with the
expansions.
For example, AT&T added 2.1 million subscribers to bring its
customer base to 77 million in the fourth quarter. But even
AT&T is increasingly relying on pre-paid customers - 36% of
last quarter's net additions didn't sign a long-term contract.
In comparison, MetroPCS finished last year with 5.8 million
customers, and Leap had 3.8 million to close 2008.
The major carriers are eyeing the pre-paid market. Sprint Nextel
Corp. (S) launched its Boost Unlimited $50 flat-rate plan early in
the year, and the response has wildly surpassed expectations.
Verizon Wireless has also tinkered with its pre-paid offering,
although its presence in the area remains minimal.
In addition to Tuesday's customer numbers, MetroPCS reports
earnings on May 7. Leap hasn't scheduled its quarterly report, but
typically releases the results in May.
MetroPCS stock closed down 2.1% to $17.95 and is down to $17.82
in recent late trading. Shares of Leap ended the session down 1.2%
to $35.08 and are down to $34.35 after-hours.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020;
roger.cheng@dowjones.com