MetroPCS Seeks 'LTE for All' Spectrum

MetroPCS Inc. (NYSE: PCS) wants to morph its successful "Wireless for All" campaign into "Long Term Evolution (LTE) for All," but to do so, it needs two things: more spectrum and cheaper smartphones.

"As data requirements continue to expand, we are interested in opportunistic spectrum acquisitions and we're evaluating all sources," MetroPCS Chairman, President and CEO Roger Linquist said on its first-quarter earnings call Tuesday morning.

LightSquared has been suggested as a potential spectrum source for the regional carrier, but opportunity may also come from AT&T Inc. (NYSE: T) if, as expected, it is required to divest spectrum as part of its acquisition of T-Mobile US Inc. . (See MetroPCS Hints at LightSquared LTE Deal and CTIA 2011: MetroPCS Reacts to AT&T/T-Mobile.)

Linquist said it's looking at as broad a range of spectrum as it can, including from AT&T/T-Mobile and any band that's compatible with its existing infrastructure. He is hoping that AWS-2 spectrum will be available in auctions in the not too distant future. [Ed. note: Anyone think Dish Network LLC (Nasdaq: DISH) chief Charlie Ergen has what MetroPCS is looking for?]

"I don't think there's an exhaust time where we simply don't have more capacity," Linquist said. "But I'd expect that in a couple years, spectrum additions will be needed for us to continue growth."

But spectrum is just one half of the equation for the regional carrier. The other half comes from lower-priced Android smartphones.

Of its customer base, 20 percent use Android phones, 30 percent of new customers opt for it and 40 percent of upgraders go with Android handsets, MetroPCS COO Tom Keys said. And that's with only three Android phones on the market. MetroPCS expects to introduce additional 3G and 4G Android touch-screen smartphones in the future.

Linquist added that he's waiting for smartphones to decline in price as their feature phone predecessors have. He wants to offer Android phones in the sub-$200 range. At some point, especially as LTE becomes a dominant world force, there will be no need for subsidies either, he said.

The natural scale of LTE will help, but MetroPCS isn't waiting around. Part of that means it is looking broaden its ability to buy chipsets beyond Qualcomm Inc. (Nasdaq: QCOM).

"There are other parties selling chipsets that could provide us the window for early price reductions in handsets," Linquist said. "We believe you simply have to, on the wholesale basis, get down to the below-$200 mark before you can begin to make real progress."

In the interim, lower-priced plans are helping MetroPCS grow its customer base. In the first quarter, it added 725,000 new subscribers, up 21 percent over last year, owing to its $40 to $60, unlimited Wireless for All plans. It also eked its average revenue per user (ARPU) up to $40.42, its first time cracking the $40 barrier in over a year. Revenues for the quarter were $1.2 billion, up 23 percent year-on-year, and churn came in at 3.1 percent, down from 3.7 percent this time last year.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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