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MetroPCS Narrows Gap Between Postpaid, Prepaid Offerings in Record-Setting Year

Tue, 03/08/2011 - 9:00pm
Andrew Berg

The no-contract carrier was first to market with LTE in the United States while delivering record financial results in 2010.

MetroPCS closed 2010 with some exceptional numbers. The company’s fourth-quarter earnings, which were admittedly hurt by charges related to debt repayment, also were lined with silver. Revenue was up, churn dropped to 3.5 percent, total subscribers reached 8.1 million and shares of the company have risen from $6 to just above $14 over the past 12 months.

Snoop DoggggAside from the numbers, the company also managed a few milestones of which any carrier, prepaid or otherwise, would be envious. MetroPCS now has roaming agreements that offer customers 3G coverage across 90 percent of the United States. It was the first carrier in the United States to roll out LTE, which it has successfully deployed across all of the 13 markets that comprise the company’s original CDMA footprint. It also managed a pair of LTE-capable phones from Samsung, most recently the Android-based Indulge.

If that’s not enough, MetroPCS claims the venerable rap icon Snoop Dogg as a spokesman in recent advertising campaigns. Does it get any better than that?

Roger D. Linquist, MetroPCS CEO, called 2010 “pivotal” for his company, citing the inclusion of taxes and fees into its plan pricing as a necessary piece of bringing the company in line with its competitors. He credits his teams all around for the jobs they did managing both a strategic pricing overhaul, as well as a network expansion in the same year.

Being first to market with LTE was important from both a competitive point-of-view for MetroPCS, as well as providing some much needed spectrum. Matching that LTE with capable devices, particularly smartphones, also was important, he says.

“I think that was an important element,” Linquist says of the company’s introduction of the BREW-based LTE-capable Samsung Craft, which he called a “transitional” device that provided a rich video experience for users wanting to truly leverage the faster speeds of LTE.

The recently launched Android-based Samsung Indulge is aimed directly at an unmet need in the prepaid market, which is affordable high-end smartphone offerings, across all platforms. But Linquist says that’s about to change.

Roger D. Linquist“You’re going to see a tremendous change in handsets in 2011,” he says, noting that the gap between what’s available through no-contract carriers and what’s available through the major contract-dependent carriers may not be so different in the future. He calls the offerings being planned by manufacturers for the fourth quarter “incredibly attractive.”

When asked about how MetroPCS sees its position in a competitive prepaid market, Linquist looks to revise the terminology, saying that the way things are shaking out, it’s no longer about prepaid versus postpaid – it’s about contract versus no-contract plans.

MetroPCS appears to be positioned well going forward. After adding almost 300,000 new subscribers in the fourth quarter of 2010, it’s now the fifth largest wireless provider behind the big four – AT&T, Verizon Wireless, Sprint and T-Mobile USA.

Linquist says MetroPCS beat the “prepaid” stigma on quality of service by a long shot, boasting many brick-and-mortar locations where customers can walk in and test out a device. “I think one of the key attributes we offer is that as we move towards smartphones, the consultative sales that we provide our customers is a much more customer-friendly option than mass retail,” he says, adding that the days of pushing bubble-packed prepaid devices through stores just doesn’t cut it for consumers anymore as handsets get more and more sophisticated.

And it’s hard to bet against MetroPCS right now. After biting the bullet and taking substantial charges on debt repayment in the fourth quarter, this is a no-contract carrier that appears headed for further greatness in the coming quarters if it can keep churn low and profit margins up. Given what was achieved in 2010, there’s no reason to believe it won’t do just that.

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