Bloomberg News

MetroPCS, Leap Decline After Subscriber Data Miss Estimates

January 09, 2012

(Updates stock prices in fifth paragraph.)

Jan. 5 (Bloomberg) -- MetroPCS Communications Inc. and Leap Wireless International Inc., the regional U.S. pay-as-you-go wireless carriers, declined after posting subscriber data for the fourth quarter that missed some analysts’ estimates.

MetroPCS added 197,000 net new users in the period, according to a statement today. Analysts predicted 223,000, the average of five estimates compiled by Bloomberg. Leap said late yesterday that monthly churn, or the rate at which users defected, was as high as 3.9 percent, missing the 3.6 percent estimate by JPMorgan Chase & Co.

Larger rivals AT&T Inc. and Verizon Wireless, which is jointly owned by Verizon Communications Inc. and Vodafone Group Plc, last year introduced $50-a-month, so-called prepaid service plans to expand in the growing pay-as-you-go market. Demand for such lower-cost plans is increasing as consumers seek to save money and skip signing into multiyear contracts.

MetroPCS’s “gross adds were worse than we thought, likely due to more intense competition from the big guys,” John Hodulik, a UBS AG analyst, said in an e-mail. He rates the stock “buy.”

MetroPCS fell 8.7 percent to $8.03 at 10:36 a.m. New York time. Leap dropped 7.2 percent to $8.54.

Monthly churn at Richardson, Texas-based MetroPCS fell to 3.7 percent from 4.5 percent in the third quarter. Chief Financial Officer J. Braxton Carter told investors Dec. 6 that he was seeing “very significant decreases in churn going into the fourth quarter.” Hodulik predicted a churn rate of 4 percent.

Leap, based in San Diego, said customer gains were about 175,000.

--Editors: Ville Heiskanen, John Lear

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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