Back to top

Analyst Blog

To compete with arch rival Leap Wireless International Inc. , MetroPCS, the prepaid arm of T-Mobile U.S. Inc. (TMUS - Snapshot Report), has doubled its operational territory. This puts MetroPCS on par with Leap in many new markets.

MetroPCS’ coverage has expanded to a potential customer base of 150 million from 100 million and includes 13 metropolitan areas. MetroPCS will also operate separate stores in markets where T-Mobile services are available. Additionally, it plans to add 1,000 prepaid stores in the new markets by the end of 2013.    

Notably, in May 2013, T-Mobile USA, a subsidiary of Deutsche Telekom, acquired MetroPCS Communications Inc. Per the deal, MetroPCS shareholders will get cash consideration of $1.5 billion along with a 26% stake in the combined entity, as compared with Deutsche Telekom's 76%. Post the deal, MetroPCS added 9 million customers to the existing 34 million of T-Mobile USA.

Going forward, T-Mobile is reportedly planning to close down MetroPCS' network over a period of two years and move the latter’s customers into T-Mobile’s network. T-Mobile U.S. plans to utilize MetroPCS’ airwaves to build and expand its own network.   

Meanwhile, AT&T Inc. (T - Analyst Report) has proposed to take over the largest prepaid wireless operator in the U.S., Leap Wireless, for $1.2 billion. Including Leap’s net debt of $2.8 billion, the value of the deal is around $4 billion. Leap offers 3G CDMA and 4G LTE networks, which cover almost 98% of the U.S. population.

T-Mobile U.S., the fourth largest carrier in the U.S., competes with AT&T Inc., Verizon Wireless and Sprint Corporation (S - Analyst Report) for postpaid customers, who pay their bills regularly MetroPCS’ superior position in the no-contract wireless market has encouraged the company to venture into the prepaid sector.

At the end of first-quarter 2013, almost 32% of the smartphones sold were prepaid as compared with 21% in the year-ago quarter. The expansion of its prepaid operations is a timely one for MetroPCS given the growing nature of the business. As it will take 6-9 months for AT&T to complete the Leap deal, we believe that penetrating into its rival’s market will be beneficial for MetroPCS, given the nation-wide footprint of T-Mobile U.S.

TMUS currently carries a Zacks Rank #3 (Hold).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%