MetroPCS Gears Up for LTE
For the second quarter, MetroPCS reported a threefold increase in earnings of $80 million, up from $26 million a year prior, as well as record subscriber additions. The prepaid carrier has added about 1.4 million total subs in the past year. Revenue for the quarter rose 18 percent, to $1.01 billion. (See MetroPCS Reports Q2.)
MetroPCS is currently testing LTE in selected metropolitan areas, and chairman, president, and CEO Roger Linquist told investors today that it's on schedule to launch LTE in those areas in the second half of the year. Its anticipated launch markets include Las Vegas and Fort Worth, Texas, with network gear from Samsung Corp. and Ericsson AB (Nasdaq: ERIC).
MetroPCS may be smaller than its rival LTE operators, but it has also claimed it will operate the first LTE network featuring smartphones in the US, and Linquist reiterated today that he doesn't want an LTE network driven by dongles. (See Counting Down to LTE.)
"Our introduction of LTE will be a strong factor in adding, shall we say, services at higher ARPU," Linquist said. He wouldn't address anticipated pricing, but said that MetroPCS will be looking at rate plans "north of what we have today, but not very far north of what we have today."
On the prepaid front, MetroPCS's earnings were helped by its current menu. Its "Wireless for All" plans run $40 to $60 per month. Rival Leap Wireless International Inc. (Nasdaq: LEAP) introduced similar plans this week. (See Leap Revamps Prepaid With Tiered Data.)
In the second quarter, MetroPCS added 303,000 subs, up from 206,000 in the year-ago period, and down from 692,000 the previous quarter when the prepaid plans were introduced. The company said it now captures one third of all non-contract subscribers in the US, citing market research.
As a low-cost provider, MetroPCS is up against competitive pressure to not stray too far from its overall ARPU for services. The carrier has been focused on adding apps and devices to its portfolio, and the move to LTE and higher ARPU services will be gradual, Linquist said. It will also come with more advanced smartphones, as Web browsing has become more prevalent amongst MetroPCS users.
In terms of the apps driving the firm's move to LTE, however, Linquist said they don't include Web browsing. In side-by-side comparisons, he doesn’t anticipate that much of a difference between 4G and MetroPCS's current CDMA network. He said that it is full-track downloads and streaming video where users will see the greatest differences. MetroPCS is working on optimizing certain sites like YouTube Inc. to make the experience more defined.
"We are not expecting to put a price umbrella on this, but we do see it as a premium service and will do it accordingly," he said of the video streaming/downloading experience.
"There may be a misconception on the 4G LTE purpose -- the purpose is nothing short of a transformation of a network. This is not just getting something fast, this is getting the network of the future all-inclusive, and we are working our way out of CDMA."
— Sarah Reedy, Senior Reporter, Light Reading Mobile