MetroPCS Communications, Inc.
), one of the leading prepaid telecom carriers in the U.S. has
reported fourth quarter subscriber results. The company
registered net subscriber loss of 93,237, a steep drop from the
year-ago gain of 197,410 subscribers. The company's total number
of subscribers fell 5% year over year to 8.8 million.
Stiff competition at the high-end smartphone market that
remains dominated by large players is mainly responsible for the
shrinking customer base. High-end devices like
) iPhone and the Samsung Galaxy series are mostly availed through
tiered contracts at cheaper rates.
As a result, it remains difficult for MetroPCS to counter the
competitive pricing for these devices offered by large carriers.
The significant financial strength of the big players allows them
to provide high subsidies on big budget phones to attract
customers, who then choose contract plans.
Further, MetroPCS has been increasingly challenged by the
aggressive rollout of competitive price plans by some of its
larger rivals to capitalize on the attractive growth opportunity
in the prepaid segment. We believe the ongoing consolidation in
the wireless industry through mergers, acquisitions and joint
ventures would make competition more severe in the coming
However, MetrPCS is progressing well in the LTE market. This
remains evident by its 4G LTE subscriber growth that was a
whopping 117% sequentially to a record 2.2 million. Churn rates
improved marginally by 10 basis points to 3.6%. The company
continues to benefit from the mobile broadband momentum success
of "4G LTE for All" service plans that foster continued financial
and subscriber growth in this space.
Looking forward to the LTE market, MetroPCS made several
changes in its 4G LTE service plans. The company offers the
cheapest 4G LTE plan at $40 per month. Additionally, it remains
the only wireless operator to offer a no-contract, unlimited 4G
LTE data plan for as low as $55 per month, inclusive of taxes and
fees. Moreover, up to three family members of the subscriber can
get the same service for only $50 a month. These cost effective
pricing plans differentiate MetroPCS from Tier-1 wireless
carriers such as
) that typically require subscribers to sign up for long-term
agreements (post-paid contracts).
The advanced 4G LTE network, cost effective 4G devices and
affordable 4G service plans are expected to remain the key
drivers of MetroPCS' 4G LTE for All. The company has
already deployed high-speed 4G LTE services in most of its major
markets and covered 97% of its market with a 5x5 megahertz
MetroPCS has a Zacks #3 Rank, implying a short-term (1-3
months) Hold rating. For the long term, we have our Neutral
recommendation on the company.
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