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MetroPCS posts deep customer losses, strong income growth

MetroPCS posted third quarter results showing a rough period for operations, though a positive return on its financials. The results come just weeks after rival T-Mobile USA reported plans to acquire MetroPCS in a convoluted offering expected to close early next year.

The carrier reported a dramatic drop in customer additions, falling from a gain of more than 69,000 during the third quarter of 2011 to a loss of 312,291 customers during its most recent quarter. Through the first nine months of the year, MetroPCS has now lost 366,699 customers compared with a gain of nearly 1 million last year, resulting in its customer base dipping below the 9 million mark.

That loss of customers was the result of slower gross customer additions, signaling an increasingly competitive market for no-contract services. A number of carriers have recently increased the appeal of no-contract services in order to tap into a market segment seen as still having room for growth.

Highlighting MetroPCS’ struggles to attract new customers, the operator noted that customer churn had decreased year-over-year from 4.5% to 3.7%, which was still not enough to offset slower gross customer additions.

Those fewer customers also spent less money per month, with average revenue per user falling 30 cents to $40.50, which MetroPCS attributed to promotional rate plans offsetting higher revenues from its LTE-based offerings. The cost per gross addition increased $8.29 year-over-year to $202.24 that was attributed to slowing gross customer additions and thus fewer customers to spread costs across.

While the slowing customer growth and dip in ARPU nicked MetroPCS’ service revenues for a 1% year-over-year decline, an increase in equipment sales helped bolster total revenues that managed to squeeze out a 4% gain to $1.259 billion for the third quarter. MetroPCS managed to curb expenses resulting in a more than tripling of net income from $64 million during the third quarter of 2011, to $196.6 million this year. The carrier also posted a 42% increase in earnings before interest, taxes, depreciation and amortization, which surged to $466 million for the quarter, with EBITDA margins increasing to 41.5%.

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