MetroPCS punished for sagging customer metrics

MetroPCS Communications Inc.’s shares plunged more than 9% after the company released its preliminary subscriber results for the third quarter of 2007, reflecting a 42% drop in net additions year-over-year.
The company had warned of a weak third quarter due to seasonality, but investors have also worried that the company would be affected by the turmoil in the sub-prime space in general.
Metro’s gross additions were 671,000-up 16.6% year-over-year and up 1.7% from the second quarter of 2007-but its net customer additions were only 114,000. That figure was down more than 42% from the 197,600 net additions that Metro added in the third quarter of last year. Metro added only about 36,000 subscribers in its core markets during the quarter, compared with more than 55,000 last year.
Churn increased to 5.2%, up 0.2% from the year-ago period and up 0.4% from this year’s second quarter. Metro ended the quarter with more than 3.66 million subscribers.
The company did not see a significant boost from its recent launch of service in Los Angeles; Metro began offering its wares in L.A. just 12 days before the quarter ended, and said that its “marketing and distribution efforts will not fully ramp up until the fourth quarter of 2007.”
MetroPCS chairman and CEO Roger Linquist noted that the company’s strongest quarters are always the fourth and first quarters of the year.
MetroPCS’ full financial results for the quarter are still forthcoming.