MetroPCS's Slow 4Q Growth Spurs Concerns About Prepaid Carriers

Date : 01/05/2012 @ 11:35AM
Source : Dow Jones News
Stock : Leap Wireless International, Inc. (MM) (LEAP)
Quote : 17.65  0.0 (0.00%) @ 2:05AM

MetroPCS's Slow 4Q Growth Spurs Concerns About Prepaid Carriers

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Investors drove down shares of pay-as-you-go carriers MetroPCS Communications Inc. (PCS) and Leap Wireless International Inc. (LEAP) after MetroPCS reported slower fourth-quarter growth and higher customer turnover despite a promotion that dropped unlimited contracts to just $25 per month.

MetroPCS recently traded down 8.6%, or 75 cents, to $8.03 and Leap Wireless was off 7%, or 64 cents, to $8.56.

Dallas-based MetroPCS said Thursday it boosted its subscriber rolls by 197,000 in the last three months of 2011, which compares with about 298,000 a year earlier. The rate customers leave, known as churn, rose to 3.7% from 3.5%.

In October MetroPCS introduced a $100 family plan for four lines each with unlimited voice minutes, texts and web use, effectively lowering the monthly rate to $25, compared with the usual price of $40. Analysts, such as R.W. Baird's William Power, had expected higher customer additions in the quarter as a result of the promotion.

Leap Wireless, which operates the Cricket brand, said Wednesday that it increased its subscriber base by 175,000, up from 107,000 a year earlier, not including more than 300,000 customers it brought on from Pocket Communications. The no-contract carrier also dropped churn to between 3.7% to 3.9% from 4% a year earlier.

Both carriers faced new competition from Verizon Wireless, which rolled out a national prepaid unlimited plan in its stores and at Radio Shack.

MetroPCS ended the year with 9.3 million customers, while Leap had 5.9 million.

-By Greg Bensinger, Dow Jones Newswires; 212-416-4676; greg.bensinger@dowjones.com

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