PCS Reaches More US Markets

MetroPCS (PCS - Analyst Report), a leading provider of unlimited pre-paid wireless service in the US, has reportedly expanded its national unlimited service coverage to include new markets in the Midwest, Northwest and parts of the Eastern US.

This expansion has nearly doubled the number of cities and towns that MetroPCS serves in the US to more than 11,000. The expanded coverage is being offered to the company's customers (on $40 or higher monthly rate plans) without any additional cost.

MetroPCS offers a broad range of wireless broadband services in the selected metropolitan areas in the US, leveraging its proprietary CDMA technology based network. The company remains one of the lowest cost wireless service providers in the US, which enables it to roll out a range of cheap service plans that start as low as $30 per month.

MetroPCS is currently enjoying meaningful traction in the Northeast region as approximately 94% of the new customer additions came from this region in the most recent quarter. A significant part of the company's network infrastructure deployment initiatives are currently centered in the Northeast region.

Despite a leading position in the unlimited prepaid segment, MetroPCS contends with a customer retention problem as evidenced by significant increase in churn (customer switch) in the last quarter. The company has been increasingly challenged by competitive discounted service plans by some of its larger rivals, such as Sprint Nextel's (S - Analyst Report) Boost Mobile, America Movil's (AMX - Analyst Report) Tracfone and Deutsche Telekom's (DT) T-Mobile USA.

MetroPCS has initiated several steps to counter intense competition and drive subscriber accretion. The company is broadening its portfolio of discounted price plans, rolling out new product/services and entering new markets for growth. Moreover, MetroPCS has recently collaborated with Ericsson (ERIC - Analyst Report) and Samsung for its forthcoming 4G Long Term Evolution (“LTE”) wireless broadband service.

While the company's expansion initiatives into new US markets appears encouraging for sustaining subscriber growth, associated expenditures may strain the balance sheet condition.

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