DOW JONES NEWSWIRES
MetroPCS Communications Inc.'s (PCS) second-quarter earnings rose 5.6% as the prepaid wireless-service provider continued to add subscribers, though margins declined on higher costs.
MetroPCS, which offers flat-rate wireless services without annual contracts, simplified its plans and cut prices late last year, just as a larger number of new entrants hopped into the prepaid business. The moves, combined with launching a 4G network and offering smartphones, have attracted new customers, yielding stronger revenue and profit growth in recent quarters. In the latest period, net subscriber additions were 198,810 for a total of 9.08 million.
MetroPCS reported a profit of $84.3 million, or 23 cents a share, up from $79.9 million, or 22 cents a share, a year earlier. Revenue jumped 19% to $1.21 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 28 cents on revenue of $1.23 billion.
Operating margin fell to 17.4% from 19.6%, reflecting a 19% increase in the cost of service and a 46% jump in the cost of equipment.
The customer turnover rate, known as churn, rose to 3.9% from 3.3%.
Average revenue per customer was up 1.6%, while the cost per user increased 5.8%.
The company raised its estimate of 2011 capital expenditures to between $900 million and $1 billion from its prior forecast of $700 million to $900 million.
Shares closed Monday at $16.18 and were inactive premarket. The stock has risen 77% over the past year.
-By Melodie Warner, Dow Jones Newswires; 212-416-2283; firstname.lastname@example.org