The nation's fifth largest wireless provider -- MetroPCS -- has checked in with its Q4 2011 financials, and on the whole, the company looks to be doing quite well. Metro reported $1.2 billion in consolidated quarterly revenues and $362 million in earnings, an increase of 16% and 15% when compared to the fourth quarter of 2010. A few other positive vitals: average revenue per user (ARPU) was up $0.76, net income rose to $77 million and churn dropped 80 basis points from 4.5% in Q3 to 3.7% in Q4. Two small blemishes can be found in the net customer additions and cost per user (CPU) columns. While MetroPCS added well over 197,000 new customers in Q4, the rate at which it grew slowed dramatically -- down 34% when compared to the fourth quarter of 2010. The company's CPU also rose $1.17 during that same period -- which can be partially attributed to LTE network services, along with general expansion and operating costs. One other mildly unfortunate note was word that voice over LTE wouldn't be launching till the second half of the year, slightly later than we had been anticipating. Taking all that into consideration, it was still a strong quarterly showing from the value-centered wireless carrier.
Fourth Quarter 2011 Highlights Include:
- Quarterly net subscriber additions of 197 thousand
- Quarterly consolidated total revenues of $1.2 billion, an increase of 16% over the fourth quarter of 2010
- Record Adjusted EBITDA of $362 million, an increase of 15% over the fourth quarter of 2010 and the highest quarterly Adjusted EBITDA in Company history
- Total subscriber growth of 15% in 2011 to over 9.3 million total subscribers
- Sixth consecutive year of over 1 million net subscriber additions
- Consolidated total revenues of $4.8 billion, an increase of 19% over 2010
- Record Adjusted EBITDA of $1.3 billion, an increase of 13% over 2010, and the highest Adjusted EBITDA in Company history
"Definition of Terms and Reconciliation of non-GAAP Financial Measures"
Roger D. Linquist, Chairman and Chief Executive Officer of MetroPCS, said, "We reported solid financial and operating results for 2011, marked by record Adjusted EBITDA for the full year and the fourth quarter as well as strong full year subscriber growth. Adjusted EBITDA both for the fourth quarter and the full year 2011 was the highest in company history at $362 million and $1.3 billion, respectively. These Adjusted EBITDA results represent strong year over year growth rates of 15% and 13%, respectively. Operationally, during the fourth quarter, we effectively balanced growth with profitability, recorded a sequential 80 basis point decline in churn, and recorded a 300 basis point sequential increase in Adjusted EBITDA margin.
"Throughout 2011, we maintained our cost discipline while growing our subscriber base. We believe 2011 results were driven by our compelling lineup of smartphones and our continued investment in our CDMA network combined with our focus on enhancing the customer experience. For the sixth consecutive year, we added over 1 million net subscribers, growing our subscriber base at a 30% CAGR over the same period. This growth rate is outstanding and we believe demonstrates that no annual contract mobile broadband wireless service continues to be the fastest growing sector within wireless. As we move towards the second half of 2012, we expect to offer MetroPCS subscribers Android smartphones on our 4G LTE network at lower prices. Since our launch of Android smartphones in late 2010, 35% of our subscriber base is now on a smartphone plan. With our 4G LTE network and line-up of smartphones, we believe we can build on our momentum and continue to drive profitable growth," Linquist concluded.
2011 Operational Highlights
- Approximately 1.2 million net subscriber additions, surpassing the 9.3 million subscriber milestone
- Sixth consecutive year of over 1 million net subscriber additions
- Introduced 4G LTE service plans which offer unprecedented value
- Launched and continued to build out 4G LTE service in all major metropolitan areas
- Introduced MetroPCS unlimited wireless service in selected portions of Connecticut and Massachusetts
- Completed amendment and expansion of senior secured credit facility and completed an additional $1 billion of borrowing
- World's first commercially available 4G LTE Android smartphone, Samsung Galaxy Indulge
- Samsung Admire and Huawei M835 Android CDMA smartphones
- 4G LTE LG Esteem for entertainment-minded consumers
- HTC Wildfire S, Company's first Android smartphone provided by HTC
- 2011 Service Offering Additions:
- Visual Voice Mail services allowing subscribers to manage voice mail directly on their mobile screen
- Rhapsody music service, which offers an unlimited mobile music experience with access to more than 12 million songs
- Added content from Disney/ABC Television Group and ESPN to MetroSTUDIO Video on Demand application for 4G LTE handsets. Clips and full-length videos are now available on 20 channels including: NBC Universal, Black Entertainment Television (BET), ESPN, ABC Entertainment and Univision.
- MetroPCS handsets available on Amazon.com
- Official wireless provider of USA Basketball
- Exclusive wireless provider for The Ultimate Fighting Championship® in the U.S. and Puerto Rico
- Consolidated service revenues of $1.1 billion for the fourth quarter of 2011, an increase of $162 million, or 17%, when compared to the prior year's fourth quarter.
- Income from operations increased $8 million, or 4%, for the fourth quarter of 2011 when compared to the prior year's fourth quarter.
- Net income increased $77 million, or 573%, for the fourth quarter of 2011 when compared to the prior year's fourth quarter. Net income for the fourth quarter of 2010 includes approximately $60 million in net charges related to the extinguishment of our 9 1/4% Senior Notes due 2014 and a gain recognized on a FCC license exchange consummated during the quarter. On a non-GAAP basis excluding the loss on extinguishment of debt and gain on the FCC license exchange, net income for the fourth quarter 2010 would have been $74 million, or $0.20 per common share.
- Adjusted EBITDA of $362 million increased by $47 million for the fourth quarter of 2011, or 15%, when compared to the prior year's fourth quarter.
- Average revenue per user (ARPU) of $40.55 for the fourth quarter of 2011 represents an increase of $0.76 when compared to the fourth quarter of 2010. The increase in ARPU was primarily attributable to continued demand for our Wireless for All and 4G LTE service plans offset by an increase in family plan penetration from 32% of our customer base in 2010 to 45% of our customer base in 2011.
- The Company's cost per gross addition (CPGA) of $166 for the fourth quarter of 2011 represents an increase of $4 when compared to the prior year's fourth quarter. The increase was primarily driven by increased promotional activities.
- Cost per user (CPU) increased to $20.00 in the fourth quarter of 2011, or a 6% increase over the fourth quarter of 2010. The increase in CPU is primarily driven by the increase in retention expense for existing customers, costs associated with our 4G LTE network upgrade and roaming expenses associated with Metro USA, offset by the continued scaling of our business.
- Churn decreased 80 basis points from 4.5% to 3.7%, when compared to the third quarter of 2011, and increased 20 basis points when compared to the fourth quarter of 2010. The sequential decrease in churn was driven by normal seasonal effects related to the traditional retail selling periods, as well as improved network performance resulting from the investment in our CDMA network to meet increased data demands. When compared to the fourth quarter of 2010, the increase in churn was primarily driven by an increase in gross additions, adjusted for false churn, in the first nine months of 2011 over the first nine months of 2010, and we believe continued economic pressures on our subscribers as well as increased data demands on our CDMA network driven by Android penetration.
- MetroPCS reported consolidated service revenues of $4.4 billion, an increase of 20% over the prior year.
- Income from operations increased $29 million, or 4%, for the year ended December 31, 2011 as compared to the prior year.
- Consolidated Adjusted EBITDA of $1.3 billion increased $156 million, or 13%, when compared to the prior year.
- Net income for the year was $301 million and increased $108 million, or 56%, when compared to the prior year. Net income for 2010 includes approximately $59 million in net charges related to the extinguishment of our 9 1/4% Senior Notes due 2014 and gains recognized on FCC license exchanges consummated during the year. On a non-GAAP basis excluding the loss on extinguishment of debt and gains on FCC license exchanges, net income for 2010 would have been $252 million, or $0.70 per common share.
MetroPCS currently expects to incur capital expenditures in the range of $900 million to $1.0 billion on a consolidated basis for the year ending December 31, 2012.