MetroPCS has made a strong case for a business plan that targets lower income consumers as the company released strong third quarter 2012 earnings figures.
MetroPCS reported that its third quarter 2012 revenues totaled $1.3 billion, an increase of four percent over third quarter 2011. Adjusted earnings before interest, taxes, depreciation, and amortization was $466 million, a 42% increase over third quarter 2011.
The company appeared to do a better job of keeping customers in third quarter 2012. MetroPCS reported a churn rate of 3.7%, down from approximately 4.5% or 80 basis points reported in third quarter 2011. The churn rate refers to the net percentage loss in customers over a certain period. Serving these customers appears to be less costly in the third quarter. MetroPCS reported cost per unit fell $1.14 from the third quarter 2011 to $18.38 in third quarter 2012.
MetroPCS’s push to get faster 4G networks to its consumers appears to be working also. The company reported that it has surpassed one million 4G Long Term Evolution (LTE) subscribers. This number represents 12% of MetroPCS’s customers.
LTE is the latest high-speed cellular data transmission network. LTE is a 4G technology, surpassing the speeds of the widely used 3G networks.
Roger D. Linquist, Chairman and Chief Executive Officer of MetroPCS, said, “With a primary focus on generating Adjusted EBITDA and cash flow during the third quarter, we are pleased to report the highest Adjusted EBITDA margin in Company history of 41.5%. Late in the third quarter, we launched 4G LTE For All and while still early, we are pleased with initial results, including customer upgrades and churn. As we enter the fourth quarter, our 4G LTE For All efforts are in full-swing and with over one million 4G LTE subscribers at the end of the third quarter, we believe we are well positioned to meet the current demands for high-speed wireless broadband service. During the fourth quarter, we plan to focus on re-energizing subscriber growth, which we expect will put incremental pressure on our CPGA and CPU. With a robust 4G LTE handset line-up that is growing, we believe our 4G LTE For All initiative provides unmatched value, with all taxes and regulatory fees included.”
The company serves 9.3 million subscribers primarily on a no-contract, paid-in-advance basis. MetroPCS serves major metropolitan areas including Atlanta, Boston, Dallas/Fort Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco, and Tampa/ Sarasota.
The company, according to its 10-Q filed last week with the U.S. Securities and Exchange Commission, will continue to target underserved market. During a conference call this morning, MetroPCS’ chief executive officer Roger Lindquist said he expects growth in the no-contract, pre-paid sector. He expects over the next eight years that 20% to 30% of wireless customers industry-wide will subscribe to a no-contract, pre-paid service.