MetroPCS Eyes 700 MHz after IPO, Breakout Q1
MetroPCS is open to bidding in the 700 MHz auction, executives said on the company’s Q1 financial conference call. But they avoided statements committing to it. The wireless carrier, which has maneuvered at the FCC in ways suggesting interest in the valuable spectrum, reported a strong quarter and predicting geographic and financial growth in the coming quarters. MetroPCS is flush; a recent IPO raised more than $1 billion cash.
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The low-cost carrier has “a fully funded business plan” to finance buildout in its AWS markets, including plans to expand in N.Y.C., L.A. and other major urban areas, said CEO Roger Linquist. That would let MetroPCS participate in the 700 MHz auction at the right price-per-POP, he said. Buying spectrum at the right price would make far more sense than “cell-splitting” for a company adding so many new subscribers, Linquist said. But the carrier’s participation hinges entirely on market conditions, he said.
MetroPCS met recently with FCC staffers to blast a Frontline public safety spectrum plan (CD April 23 p1), claiming the proposal has “poison pills” that would lead to legal challenges. MetroPCS’s robust case against delay could signal more than casual interest in an active auction role. But sources close to MetroPCS and other small-to-midsize carriers have said that acting too soon could keep them from completely integrating their newly acquired AWS spectrum in time for the bidding (CD Jan 18 p4).
MetroPCS saw Q1 profits more than double from 2006 due to subscriber growth. It reported $30.2 million this quarter, compared with $12.2 million in Q1 2006. The Tex.- based carrier, which Linquist said will keep focusing on affordable plans in major markets, reported $536.7 million in Q1 revenue, up 63% from $329.5 million last year. The company added 454,000 net subscribers in the quarter; new subscribers are the company’s bread & butter, but it also saw a solid rise in hardware sales, Linquist said -- to $97.2 million in Q1 from $54.1 million in Q1 2006.
Many institutional investors were involved with the IPO and so couldn’t comment on the company’s Q1 results. But Stanford Group Company called the carrier’s stock strong and recommended buying. The debt up to $300 million that it would take on to participate in the 700 MHz auction is well worth it, Stanford said.