MetroPCS May be the Biggest Winner in AT&T/T-Mobile Deal

Mar 22, 2011
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With T-Mobile soon to be swallowed up by AT&T (probably), MetroPCS will be the most likely choice for many T-Mobile customers looking for a new carrier. That would most likely make Metro PCS the nation's new fourth-largest wireless carrier, and that is why MetroPCS's stock jumped up 5% upon the merger announcement. MetroPCS currently has 8.1 million subscribers, up 35% over the last two years (a time period, we should mention, in which T-Mobile lost customers).


MetroPCS targets big city markets and keeps their prices low by only using their own networks in dense urban areas that are cheap to serve. They have been adept at securing roaming agreements to use competitor's networks in other areas, so their cost to serve 90% of the country is a fraction of what it costs the larger companies. In fact, last year it cost the company only $18.49 a month to serve the average customer. That lets MetroPCS cut its rates to just about half what AT&T and Verizon charge, only $40 per month (including taxes) for unlimited talk, text, and Web, and about $50 per month for the same plan with a 4G smartphone. That's a pretty impressive profit margin. And since AT&T and Verizon don't release their cost per customer, but we can bet it's a lot higher.

MetroPCS, in its annual filing with the SEC, expressed some worry that its costs could go up if the carriers whose networks it leases decide to raise prices: "In some instances, large national wireless broadband mobile services carriers have been reluctant to enter into roaming agreements at attractive rates with smaller and mid-tier national carriers like us, which limits our ability to serve certain market segments, and recent FCC actions to promote automatic roaming do not resolve these difficulties."

Meanwhile, MetroPCS looks like a great deal if you live in the urban areas it serves. And if you are a T-Mobile customer, you might just be looking their way.
[via Fortune]


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