MetroPCS triples second-quarter earnings as subscribers keep flowing in

Thursday, August 5, 2010

MetroPCS triples 2Q earns, gains subscribers

DALLAS — MetroPCS Communications Inc., which provides prepaid wireless service, on Thursday said its second-quarter earnings tripled as new price plans continued to pull in customers while it held the line on costs.

MetroPCS shares rose 69 cents, or 7.9 percent, to $9.48 in morning trading.

The Dallas company added a net 303,009 subscribers in the April to June period, compared to 205,585 in the same period a year ago. That’s a contrast to results at Leap Wireless International Inc., a smaller rival with a similar business plan, which reported a loss of 112,000 in the second quarter after years of gains.

MetroPCS earned $80 million, or 22 cents per share in the second quarter, matching the average analyst estimate as polled by Thomson Reuters. It reported net income of $26.2 million, or 7 cents per share, a year earlier.

Revenue rose 18 percent to $1.01 billion, again matching analyst expectations.

MetroPCS provides unlimited calling for flat monthly rates, with coverage mainly in cities. In January, it started adding free features and including taxes in the quoted prices, moves that together amounted to a price cut.

MetroPCS ended the quarter with 7.6 million subscribers, making it the fifth-largest U.S. carrier that owns its own network.

Sanford Bernstein analyst Craig Moffett said results were helped by the fact that MetroPCS’s improving subscriber gains were due to it becoming better at holding on to customers, rather than recruiting new ones, which can be expensive up front. All the same, the results were “strong,” he wrote in a morning research report.

Leap Wireless on Tuesday announced a change in strategy. It’s going to move from being a regional player to selling phones and service nationally through large retailers, supplementing its own network coverage with that of Sprint Nextel Corp.

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