MetroPCS Communications Q3 2010 Earnings Call Transcript

MetroPCS Communications (PCS)

Q3 2010 Earnings Call

November 04, 2010 9:00 am ET

Executives

Roger Linquist - Founder, Chairman, Chief Executive Officer and President

Thomas Keys - Chief Operating Officer

J. Carter - Chief Financial Officer and Executive Vice President

Keith Terreri - Vice President of Finance and Treasurer

Analysts

John Hodulik - UBS Investment Bank

Sandeep Gupta

Michael Rollins - Citigroup Inc

Simon Flannery - Morgan Stanley

Romeo Reyes - Jefferies & Company, Inc.

David Barden

Brett Feldman - Deutsche Bank AG

Richard Prentiss - Raymond James & Associates

Presentation

Operator

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Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the MetroPCS Communications Third Quarter 2010 Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Keith Terreri, Vice President and Treasurer for MetroPCS. Please go ahead, sir.

Keith Terreri

Thank you, Wendy, and good morning, everyone. I'm Keith Terreri, and I'd like to welcome you to our Third Quarter 2010 Conference Call. The speakers with me this morning are Roger Linquist, our Chairman, President and Chief Executive Officer; Tom Keys, our Chief Operating Officer; and Braxton Carter, our Executive Vice President and Chief Financial Officer.

The format for today's call is as follows: first, Tom will provide an update on a number of operational results and initiatives. Then Braxton will review the financial highlights of the third quarter of 2010, and Roger will provide an overview of our business followed by a question-and-answer session.

During today's call, we will refer to certain non-GAAP financial measures. We reconciled these historical non-GAAP measures to GAAP measures on our earnings release, which is available at www.metropcs.com, under the Investor Relations tab. Also, this quarter, supplemental slides are available for download and printing on our Investor Relations website. These slides may contain forward-looking statements and may refer to publicly available information.

Before I turn the call over to Tom, I want to remind you that certain information that we will discuss in this conference call may constitute forward-looking statements within the meaning of Federal Securities laws. Forward-looking statements involve risks and uncertainties that could cause actual results with the timing of events to materially differ from those made in the forward-looking statements. Words such as believes, anticipates, expects, intends, plans, should, could, would, view, estimates, projects and other similar expressions typically identify forward-looking statements.

Forward-looking statements include, but are not limited to, statements we make regarding our future operational and financial plans, our prospects for success and our positioning in the highly competitive wireless industry. Furthermore, included in our forward-looking statements are statements regarding customer demand for our services, our ability to service customer demand, future products and services, our ability to expand the addressable market, our estimates of capital expenditures, benefits of upgrading our networks to 4G and multi-customer demand for video and entertainment on wireless handsets, and other statements which are not historical. Management may make additional forward-looking statements in response to questions.

Our forward-looking statements are subject to general economic conditions, financial, competitive, business, political, regulatory and other factors that are beyond our control and you should not place undue reliance on these statements. Additionally, our forward-looking statements are subject to the risk factors described in our earnings release and our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, copies of which can be obtained free of charge from the SEC at www.sec.gov, or from our website or directly from contacting the Investor Relations department. We encouraged you to review these documents.

I'd like to remind you that the results for the third quarter may not be reflective of results for the full year or any subsequent periods. Also, I'd like remind everyone that effective January 1, 2010, we now aggregate our 13 operating segments into one reportable segment.

For anyone listening to a tape or webcast replay, or reviewing a written transcript of today's call, please note that all information presented is current only as of November 4, 2010, and should be considered valid only as of November 4, 2010, regardless of the date reviewed, read or replay.

MetroPCS disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or developments or otherwise, except as required by law. The company does not plan to update or reaffirm guidance except through formal public disclosure pursuant to Regulation FD. Certain terms that are used in today's call are registered trademarks of MetroPCS. We intend to file our quarterly report on Form 10-Q for the period ended September 30, 2010, with the SEC by November 8.

At this time, I'd like to turn the call over to our Chief Operating Officer, Tom Keys.

Thomas Keys

Thank you, Keith. Good morning, everyone. I'm pleased to report third quarter results that have significantly improved from the third quarter 2009. Net subscriber additions of 223,000, churn of 3.8% and gross additions of over one million drove record third quarter adjusted EBITDA of over $315 million, up 16% to year-over-year. Our Wireless for All initiatives continue to be our area of focus. Our year-over-year improvements in operations and financial results have exceeded our expectations and are attributable to the success we have had experienced with our wireless role rollouts. Our existing subscribers have responded positively to the elimination of our first month free and our corresponding reduction in handset price. As a result, false churn has declined as our subscribers continue to upgrade their handsets at higher levels than last year. This increase in upgrade activity has substantially reduced false churn. And going forward, we believe we could manage churn in a 3% to 4% range on a sustainable basis.

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