Discount carriers MetroPCS Communications Inc. (PCS) and Leap Wireless International Inc. (LEAP) saw intense competition hamstring their efforts to keep subscriber growth flowing in the second quarter.

The pre-paid players are laboring to keep pace with rivals, who are also aggressively muscling into the so-called pre-paid segment. MetroPCS posted early Thursday a startlingly high turnover rate, while Leap, reporting after the bell, took down its expectations for subscriber growth this year. The disappointing results come at a time when investors were looking for blowout numbers.

A bigger concern: more competition is on the way.

Leap shares fell 24.3% to $18.30 in after-hours trading. MetroPCS's stock fell 29% to $8.99 in the regular session.

"It's not an overreaction," said Walter Piecyk, an analyst at Pali Research, on MetroPCS's decline. "There's a lot of competition coming. Even when it hasn't arrived, they can't put up good numbers."

MetroPCS Chairman and Chief Executive Roger Linquist, however, called the movement a knee-jerk reaction.

"Not only are we the best deal in town to our customers, but now potentially to our investors," Linquist quipped in an interview with Dow Jones Newswires.

Leap CEO Doug Hutcheson said in a separate interview that the adjusted expectations reflected the "turmoil" in the industry.

MetroPCS and Leap both took steps in recent weeks to stay competitive, including adding features to its cheaper plans. Both are expanding into new markets and rely on a low-cost model to profitably serve customers with cheaper plans and no service contracts.

"We see this as a competitive market," Linquist said. "The best strategy for a player like ourselves is to have a superior cost structure."

The lack of a contract, however, has meant both companies have been unable to keep their customers when the next cheaper plan arrives around the corner. Boost Mobile, a unit of Sprint Nextel Corp. (S), was the chief culprit this quarter. But Tracfone Wireless's Straight Talk, as well as ramped up efforts by AT&T Inc. (T) and Deutsche Telekom AG's (DT) T-Mobile USA are expected to hit MetroPCS hard in the coming quarters.

"The competition is obviously already having an impact on MetroPCS," Piecyk said.

MetroPCS reported income of $26.2 million, or 7 cents a share, down from $50.5 million, or 14 cents a share, a year earlier.

Revenue rose 27% to $859.6 million.

Wall Street was looking for earnings of 14 cents and revenue of $862 million.

MetroPCS added 205,585 customers in the period, well below Wall Street's estimates. It ended the quarter with 6.3 million customers.

The turnover rate jumped to 5.8% from 4.5%. Historically, customer defections rise in the third quarter, said MetroPCS Chief Financial Officer Braxton Carter, but he blamed the abnormally high customer losses on aggressive promotions in the first quarter, which led to little incentive for customers to stick around after the first few months.

MetroPCS has since removed the promotions with the thinking that customers who have to invest more early on in phones and service plans are likely to stay.

Leap, meanwhile, posted a loss of $61.2 million, or 89 cents a share, compared with year-earlier loss of $24.6 million, or 39 cents a share. Results were hurt by a one-time legal charge of 50 cents a share.

Revenue rose 25.8% to $597.4 million.

Wall Street was looking for a loss of 30 cents a share and revenue of $636 million.

Leap added 202,767 net customers to its base of 4.5 million. It also slightly took down its forecast for full-year additions, now targeting 1.5 million. It previously said it expected to be higher than that level.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com