Shares of MetroPCS Communications Inc. jumped Thursday after the wireless carrier reported its fourth-quarter profits doubled, topping expectations in a very competitive environment.
The Dallas-based carrier's stock rose 35 cents, or 5.6 percent, to $6.59 in midday trading.
MetroPCS, which provides on flat-rate prepaid service in urban markets, said it earned $33 million, or 9 cents per share in the last three months of 2009. That compared with earnings of $15 million, or 4 cents per share, a year ago.
Revenue was $930 million, up from $724 million a year ago on continued subscriber gains.
Analysts polled by Thomson Reuters had on average expected earnings of 6 cents per share on revenue of $895 million.
In the quarter, MetroPCS added 317,255 subscribers, a figure it had revealed in January. It ended the year with 6.64 million subscribers, making it the fifth-largest carrier that owns its own network, though it's far behind No. 4 T-Mobile USA, which had 33.8 million.
Deutsche Bank analyst Brett Feldman that the company has cut prices and launched a national ad campaign since the end of the quarter, and that it's signaled that margins would be tighter this year. That means only limited conclusions can be drawn from the fourth quarter's results.
Sanford Bernstein analyst Craig Moffett noted that while monthly service fees are declining across the industry, MetroPCS and its rival Leap Wireless International Inc. keep their costs lower than the big national carriers, by focusing on serving cities rather than building out coverage into the countryside.
There is speculation that MetroPCS and Leap, which operates under the "Cricket" brand, will merge. Analysts have pointed out for years that such a move would make sense, given the similarity in their business models and their largely complementary networks.