Despite missing analysts' expectations, MetroPCS shares rose over 10 percent in early trading after it swung to a fourth-quarter profit and reaffirmed its earnings guidance.
Subscriber growth and rising service revenue brought the discount carrier to a fourth-quarter profit of $15 million, or 4 cents per diluted share, up from a loss of $47 million, or 14 cents per diluted share, in the same period last year.
Though service revenue climbed 30.3 percent in 2008, the rise was partially offset by a 28 percent decline in equipment sales, which fell to $57.6 million in the fourth quarter from $79.9 million last year.
Analysts predicted earnings of 7 cents per share on revenue of $765.26 million. The company came slightly under expectations on rising churn, falling ARPU and declines in equipment sales, posting revenue of $724 million, a 22.5 percent increase from last year's figure of $591 million.
Though revenue rose, ARPU fell 5.4 percent, to $40.52 from $42.83. The company attributed the drop in ARPU to higher participation in lower-margin family plans, which was partially offset by an increase in higher-cost service plans resulting from the company's elimination of unlimited text messaging in the $40 rate plan.
Churn rose three percentage points, to 5.1 percent from 4.8 percent last year.
Despite difficulties with ARPU and churn, the company reported the best quarterly subscriber growth in its history, with 520,000 net subscriber additions, said company CEO Roger Linquist. MetroPCS got a boost from ongoing wireline defection and a shift in spending habits as cash-strapped consumers looking to cut expenses move to flat-rate plans.
The company reaffirmed its November guidance on net subscriber additions, capital expenditures and earnings before interest, taxes, depreciation and amortization (EBITDA). For 2009, EBITDA should come in between $900 million and $1.1 billion, with net adds rising between 1.4 million and 1.7 million. Capital expenditures are expected to fall to between $700 million and $900 million, compared with last year's capex of $1.2 billion.
Though it plans to lower capital expenditures, MetroPCS said it will focus on building out networks to cover 40 million people during 2009 and 2010, including the Boston and New York metropolitan areas, where service was launched this month.
For the full year, the company posted net income of $149 million, or 42 cents per diluted share, up 49 percent from $100 million in 2007, or 28 cents per diluted share. Revenue rose to $2.75 billion from $2.236 billion last year. MetroPCS added more than 1.4 million net subscribers, bringing its total subscriber base to 5.37 million.