MetroPCS Adds Subscribers, Posts Strong 3Q Earnings

By Beecher Tuttle November 05, 2010

MetroPCS Communications, the nation's fifth-largest wireless carrier, posted better-than-expected third quarter earnings on Wednesday of $77 million, or $0.22 per share. The telecom provider topped analysts' forecasts by $0.01 per share by adding nearly three-times as many subscribers as it did in the same quarter last year.

The wireless carrier posted revenue of $1.02 billion, marking a 14 percent increase over the previous quarter. MetroPCS outperformed its closest competition due to its dominance in the prepaid mobile phone market, which has been one of the most explosive sectors in the telecom industry over the last year, according to the Wall Street Journal.

During the third quarter alone, MetroPCS added approximately 223,000 subscribers, increasing its total customer base to nearly 8 million. The company's stock has risen by 42 percent in this year alone. In contrast, its top rival Leap Wireless International lost more customers than it gained in the third quarter and saw its average revenue per user fall by 3.4 percent, the Journal reports.

In related news, the wireless carrier announced on Thursday that it will take its services nationwide with a new plan called Metro USA. The initiative allows MetroPCS to cover 90 percent of the U.S. population, meaning customers will no longer be subject to as many expensive roaming charges for using another carrier's network. Currently, the company only serves major markets like New York, Los Angeles and Boston.

"For the most part, people can go almost anywhere and not worry about paying any sort of roaming or travel-talk fees," said a company spokesperson in a release.

It is still unclear how the new plan will affect MetroPCS' bottom line. While the program will most certainly further the company's subscriber growth, it will most likely increase the cost of service and could cut into profit margins, Mizuho Securities USA analyst Michael Nelson told Reuters.

Braxton Carter, chief financial officer for MetroPCS, noted in a recent conference call that the increase in coverage should not adversely affect margins.

Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf

TechZone360 Contributor

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