MetroPCS: LTE Will Bring Subscribers Back
MetroPCS Inc. (NYSE: PCS) lost subscribers for the first time ever in the second quarter, but the prepaid carrier is counting on the completion of its Long Term Evolution (LTE) network to spur its return to subscriber growth.
That will happen in the fourth quarter, so the current quarter will likely be a rough one too. (See MetroPCS Sacrifices Profits for LTE.)
The regional operator lost 186,000 customers in the second quarter, but it did succeed in passing 700,000 customers, or 8 percent of its total subscriber base, with LTE. The carrier now covers 90 percent of its customer base with the 4G network, up from 80 percent last quarter.
MetroPCS is planning its full court press on LTE for the end of the third quarter, when it will launch "4G LTE for All" accompanied by lower-cost smartphones, including at least one voice-over-LTE (VoLTE)-capable device. MetroPCS anticipates this initiative will return it to subscriber growth in the fourth quarter. (See MetroPCS Blames 4G Voice Wait on Qualcomm.)
"At the end of the fourth quarter, affordable, 4G LTE handsets will be available and we'll be very near completion of our 4G LTE rollout with over 97 percent of PoPs covered," MetroPCS Chairman and CEO Roger Linquist said on the carrier's earnings call Thursday.
Along with VoLTE, MetroPCS will be launching a full rich communications suite (RCS), supporting simultaneous voice and multimedia services. Linquist believes this will differentiate Metro's brand of LTE, which will be on slower 5x5 channels at launch, from other no-contract competitors. The strategy will also let the carrier reuse its CDMA spectrum for LTE, which will be important for future growth.
MetroPCS will also continue looking at spectrum acquisition options, including potential deals with LightSquared (if LightSquared clears up its interference issues, Linquist said) and with Clearwire LLC (Nasdaq: CLWR), which he said is short on range, but still useful for a company like MetroPCS that operates principally in larger, dense markets. Potential divestitures from Verizon Wireless 's cable deal are also on the table. (See MetroPCS Balks at Wholesale LTE.)
"We think all those initiatives give us a very strong opportunity to grow our business and the game of hunting spectrum is, as you know, a very difficult one, so we'll be very opportunistic," Linquist said.
Unlike the postpaid players, MetroPCS is focusing squarely on the smartphone, and driving higher average revenue per user (ARPU). That metric will continue to suffer in the third quarter, due to pricing promotions and family plans, CFO Braxon Carter said. Linquist, however, expects a lift in APRU on LTE, but it will take the better part of 2013 for it to emerge, he said.
"For the first time ever, we're going to be able to market our products and services in the no-contract market with premium devices and low-cost service plans to match," Linquist said. "We'll get our message out."
— Sarah Reedy, Senior Reporter, Light Reading Mobile