MetroPCS Opening Markets Where it Bought Spectrum in FCC AWS Auction
Low-cost carrier MetroPCS is making substantial progress in building out the markets for the licenses it obtained in 2006’s advanced wireless services auction, CEO Roger Linquist said Wednesday as the company released Q4 results. MetroPCS sees strong potential to offer wireless service that will replace wireline service in four major new markets: New York, Boston, Philadelphia and Las Vegas.
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Linquist said the company has been able to clear the AWS spectrum at the rate expected. MetroPCS, along with Leap Wireless, which reports results Thursday, was a leading bidder in the AWS auction. “AWS network equipment is currently available,” Linquist said. “We expect handsets that meet our testing standards and the needs of our customers will be available in commercial quantities during the first quarter of 2008.” MetroPCS expects to start offering service in Las Vegas in Q2, in Philadelphia in Q4, in Boston in Q1 2009 and in New York during the first half of 2009.
MetroPCS reported success in building out its expansion market of Los Angeles, a model it plans to apply in other cities. “During the fourth quarter of 2007, we invested in advertising and marketing in order to prime the pump and increase awareness of MetroPCS service,” Linquist said. “These investments have helped create brand awareness and product acceptance.” Chief Financial Officer Braxton Carter said “there is no way that we could have met our positioning for the fourth quarter had Los Angeles not continued to ramp very well.” But the company didn’t disclose the number of subscribers it added in the market.
MetroPCS also had success in selling its service in Detroit. Good news for the company is that in that city, one of the most economically depressed in the country, MetroPCS has not seen substantial churn largely because many of its subscribers use their cellphones as their only phone, company officials said. “With severe or trying economic times, if they continue, we actually think there’s an opportunity for MetroPCS,” Carter said. “You'll see people trading down” in selecting a service provider.
Overall, MetroPCS, posted a loss of $47.2 million, compared to a year-ago loss of $23.1 million. An impairment charge of $83 million to write down auction-rate securities put the company in the red. Revenue increased 30 percent over last year to $591.1 million for the quarter. For all of 2007, the company reported $2.2 billion in revenue, an increase of 45 percent over 2006, and net income of $100 million. Churn was 4.8 percent for the quarter and average revenue per user was $42.54.
MetroPCS said it hit the four million customer mark in January. For 2008, the company reaffirmed guidance that net subscriber additions will be 1.25 million to 1.52 million, with 1.0 million to 1.2 million added in Los Angeles and other expansion markets.