MetroPCS Posts Record Growth
MetroPCS continued its upward swing, boosted by budget-conscious consumers flocking to its flat-rate, no-contract bargains. The company added a record 684,000 net customers in its first quarter thanks to recently launched services in New York and Boston. The 51 percent increase over last year’s figures marks MetroPCS’ third sequential quarter of growth.
Despite sales that rose 20 percent to $795.3 million, the company still suffered from discount carriers’ common ailments: low ARPU and high churn rates. ARPU fell to $40.40 from $42.51 last year, a decrease of 5 percent. Churn rose a full percentage point to 5 percent.
MetroPCS made $44 million in the first quarter, or 12 cents a share, an 11 percent rise from last year’s figure of $39.5 million, or 11 cents a share. A 29 percent rise in service revenue helped offset a 34 percent drop in equipment revenue and $382,000 in write-downs related to hedging.
The company reiterated its previous guidance. For the full year 2009, MetroPCS expects net subscriber additions ranging between 1.4 million and 1.7 million. Earnings before income taxes, depreciation and amortization should come in between $900 million and $1.1 billion. The company also plans heavy capital expenditures in 2009 as it expands its network to cover 40 million people. MetroPCS will spend between $700 million and $900 million on its network buildout, but still expects to be free cash flow positive on a consolidated basis later this year.
MetroPCS rival Leap Wireless International is expect to report its first-quarter earnings after the market closes today. Analysts polled at Yahoo Finance expect Leap to lose 69 cents per share on sales of $594.91 million. Analysts polled by Bloomberg expect a slightly wider loss of 70 cents per share.
Last quarter, Leap reported a net loss of $54.8 million, more than double its losses the year earlier. The company attributed the loss to heavy capital expenditures related to its expansion into new markets, which accounted for a charge of 86 cents per share. Despite its efforts to build out its network, Leap still fell behind MetroPCS in terms of net customer additions. The company added a net 385,000 customers last quarter, bringing its subscriber base to 3.8 million. MetroPCS’ customer base now stands at 6.1 million.