Investors bullish on MetroPCS’ Q3

MetroPCS Communications Inc. beat Wall Street’s earnings expectations in spite of weak customer numbers, and the company’s stock soared nearly 13% in early afternoon trading.
MetroPCS’ financial metrics were strong, with a 47% year-over-year increase in service revenue to $489 million. The company’s total revenues increased from $396 million to $557 million, and its net income was up from $29 million in the third period of 2006 to $53 million this year.
However, the carrier’s customer metrics weren’t quite as impressive. Metro’s churn was up from 5% in the year-ago period to 5.2% this year, and net additions were down year-over-year from 197,600 subscribers during the third quarter of 2006 to 114,300 customers this year-a decrease of 42%. Average revenue per user dropped one cent year-over-year to $42.77.
The company cited “seasonality” and a troubled economy for its shortfalls.
Roger Linquist, chairman and CEO of MetroPCS, noted that “we’ve added these subscribers during our third quarter, which historically has been one of our seasonally slowest quarters characterized by lower net additions and higher churn.”
The carrier added that it expects to see a 20% to 30% reduction in customer net additions during the fourth quarter due to an economic slowdown. But, MetroPCS added, “we believe economic slowdowns facilitate an increase in our penetration rates as consumers look for compelling value propositions.”
The company recently launched operations in the Los Angeles market, where it said it currently covers 11 million potential customers. Metro said it expects the L.A. market, along with future expansion to New York, Boston, Philadelphia and Las Vegas, to contribute to its growth.