MetroPCS reports strong customer adds, but at a cost

MetroPCS Communications Inc. reported higher subscriber growth but increased costs to get those subscribers in its first-quarter financial results. The flat-rate carrier cited its Wireless for All tax-inclusive plans, which were introduced in early January, for the bump in quarterly net subscriber additions. Increased competition in the prepaid space has forced some of the smaller carriers to get particularly creative in their marketing and pricing plans.
While revenues ticked up 22% in the first quarter to $971 million, the carrier’s profit was cut 47% to $23 million, compared to $44 million in the same quarter a year ago. Average revenue per user declined 1.4% to $39.83 vs. $40.40 a year ago. However, the carrier improved its churn metric to 3.7%, down from 5% in first-quarter 2009.
“ After launching our Wireless for All tax-inclusive plans in early January, we are particularly proud to report record net subscriber additions for the quarter of nearly 700,000 and a notable decrease in churn as compared to the first quarter 2009,” said CEO Roger Linquist, who also serves as chairman and president. “With this strong customer response to our Wireless for All plans, our consolidated subscriber base grew dramatically: over 10% during the first quarter. Also, over the past 12 months, in the midst of a weak economy and an increasingly competitive landscape, we have grown our subscriber base by over 21%.”
The carrier added 691,602 subscribers during the quarter, up nearly 8,000 users compared to the previous year, and now counts 7.3 million users on its network. Cost per gross addition jumped $11.95 per customer to $146.18, primarily due to increased marketing costs, the carrier said. Its cost per user metric also jumped $18.79 in the quarter, due to increased handset subsidies, including taxes in the Wireless for All promotion and its unlimited international calling plans. The carrier did not offer guidance going forward.
Fellow flat-rate provider Leap Wireless International Inc. reports its first-quarter financials after the stock market closes today.