MetroPCS Communications Inc. (PCS, Financial) filed Quarterly Report for the period ended 2010-06-30.
Metropcs Communications Inc. has a market cap of $3.22 billion; its shares were traded at around $9.11 with a P/E ratio of 15.71 and P/S ratio of 0.92. PCS is in the portfolios of Wilbur Ross of Invesco Private Capital, Inc., Richard Perry of Perry Capital, Steven Cohen of SAC Capital Advisors, Paul Tudor Jones of The Tudor Group, Columbia Wanger of Columbia Wanger Asset Management, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC.
Equipment Revenues. Equipment revenues decreased approximately $2.4 million, or approximately 3%, to approximately $90.4 million for the three months ended June 30, 2010 from approximately $92.8 million for the three months ended June 30, 2009. The decrease in equipment revenue is primarily driven by $24.7 million that would have been recognized as service revenues but was classified as equipment revenues during the three months ended June 30, 2009, in accordance with FASB Accounting Standards Codification, or ASC, 605, (Topic 605, Revenue Recognition), because the consideration received from customers was less than the fair value of promotionally priced handsets. This decrease was partially offset by an increase in upgrade handset sales to existing customers accounting for approximately $15.5 million and a higher average price of handsets activated accounting for approximately $5.8 million.
Cost of Service. Cost of service increased approximately $39.5 million, or approximately 15%, to approximately $308.2 million for the three months ended June 30, 2010 from $268.7 million for the three months ended June 30, 2009. The increase in cost of service is primarily attributable to the 22% growth in our customer base during the twelve months ended June 30, 2010, the deployment of additional network infrastructure during the twelve months ended June 30, 2010 and costs associated with our unlimited international calling product. In addition, stock-based compensation expense included in cost of service decreased $0.6 million for the three months ended June 30, 2010 as compared to the same period in 2009.
Cost of Equipment. Cost of equipment increased approximately $8.0 million, or 3%, to approximately $235.4 million for the three months ended June 30, 2010 from $227.4 million for the three months ended June 30, 2009. The increase is primarily attributable to higher upgrade handset costs to existing customers which led to an approximate $55.7 million increase, partially offset by a lower average cost of handsets accounting for approximately $21.5 million, coupled with a decrease in gross customer additions accounting for an approximate $25.2 million decrease.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased approximately $16.3 million, or 11%, to $158.6 million for the three months ended June 30, 2010 from $142.3 million for the three months ended June 30, 2009. Selling expenses increased by approximately $11.9 million, or 16%, for the three months ended June 30, 2010 compared to the three months ended June 30, 2009. The increase in selling expenses is primarily attributable to an approximate $13.8 million increase in marketing and advertising expenses as well as an approximate $1.4 million increase in employee related costs to support our growth. These increases were partially offset by a $2.9 million decrease in MetroFLASH® expense. General and administrative expenses increased approximately $4.6 million, or 8%, for the three months ended June 30, 2010 as compared to the three months ended June 30, 2009 primarily due to the growth in our business. In addition, stock-based compensation expense included in selling, general and administrative expenses decreased $0.2 million for the three months ended June 30, 2010 as compared to the same period in 2009.
Equipment Revenues. Equipment revenues increased $46.2 million, or approximately 29%, to $207.6 million for the six months ended June 30, 2010 from approximately $161.4 million for the six months ended June 30, 2009. The increase is primarily attributable to an increase in upgrade handset sales to existing customers accounting for approximately $34.9 million as well as a higher average price of handsets activated accounting for approximately $33.0 million. These increases were partially offset by a decrease of $23.9 million that would have been recognized as service revenues but was classified as equipment revenues during the six months ended June 30, 2009, in accordance with ASC 605, because the consideration received from customers was less than the fair value of promotionally priced handsets.
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Metropcs Communications Inc. has a market cap of $3.22 billion; its shares were traded at around $9.11 with a P/E ratio of 15.71 and P/S ratio of 0.92. PCS is in the portfolios of Wilbur Ross of Invesco Private Capital, Inc., Richard Perry of Perry Capital, Steven Cohen of SAC Capital Advisors, Paul Tudor Jones of The Tudor Group, Columbia Wanger of Columbia Wanger Asset Management, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:
We are a wireless telecommunications carrier that currently offers wireless broadband mobile services primarily in the greater Atlanta, Boston, Dallas/Ft. Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco and Tampa/Sarasota metropolitan areas. In 2005, Royal Street Communications, LLC, or Royal Street Communications, and with its wholly-owned subsidiaries, or collectively, Royal Street, was granted licenses by the Federal Communications Commission, or FCC, in Los Angeles and various metropolitan areas throughout northern Florida. We own 85% of the limited liability company member interest in Royal Street Communications, but may only elect two of the five members of Royal Street Communications management committee. We have a wholesale arrangement with Royal Street under which we purchase up to 85% of the engineered capacity of Royal Streets systems allowing us to sell our standard products and services under the MetroPCS brand to the public. Additionally, upon Royal Streets request, we have provided and will provide financing to Royal Street under a loan agreement. As of June 30, 2010, the maximum amount that Royal Street could borrow from us under the loan agreement was approximately $2.4 billion of which Royal Street had borrowed approximately $1.6 billion and had net outstanding borrowings of approximately $1.2 billion through June 30, 2010. Royal Street has incurred an additional $11.4 million in net borrowings through July 31, 2010. Under that certain Amended and Restated Limited Liability Company Agreement of Royal Street Communications, LLC, C9 Wireless, or C9, the controlling member of Royal Street Communications, has the right to put its member interest in Royal Street Communications to us for a return of capital plus a fixed return, or the put. The put is subject to customary closing conditions, including consent of the Federal Communications Commission, or FCC. On April 26, 2010, we received a written notice from C9 that it was exercising its put with the closing to not occur before the fifth anniversary of the grant of FCC licenses to Royal Street, or on or after December 22, 2010.Equipment Revenues. Equipment revenues decreased approximately $2.4 million, or approximately 3%, to approximately $90.4 million for the three months ended June 30, 2010 from approximately $92.8 million for the three months ended June 30, 2009. The decrease in equipment revenue is primarily driven by $24.7 million that would have been recognized as service revenues but was classified as equipment revenues during the three months ended June 30, 2009, in accordance with FASB Accounting Standards Codification, or ASC, 605, (Topic 605, Revenue Recognition), because the consideration received from customers was less than the fair value of promotionally priced handsets. This decrease was partially offset by an increase in upgrade handset sales to existing customers accounting for approximately $15.5 million and a higher average price of handsets activated accounting for approximately $5.8 million.
Cost of Service. Cost of service increased approximately $39.5 million, or approximately 15%, to approximately $308.2 million for the three months ended June 30, 2010 from $268.7 million for the three months ended June 30, 2009. The increase in cost of service is primarily attributable to the 22% growth in our customer base during the twelve months ended June 30, 2010, the deployment of additional network infrastructure during the twelve months ended June 30, 2010 and costs associated with our unlimited international calling product. In addition, stock-based compensation expense included in cost of service decreased $0.6 million for the three months ended June 30, 2010 as compared to the same period in 2009.
Cost of Equipment. Cost of equipment increased approximately $8.0 million, or 3%, to approximately $235.4 million for the three months ended June 30, 2010 from $227.4 million for the three months ended June 30, 2009. The increase is primarily attributable to higher upgrade handset costs to existing customers which led to an approximate $55.7 million increase, partially offset by a lower average cost of handsets accounting for approximately $21.5 million, coupled with a decrease in gross customer additions accounting for an approximate $25.2 million decrease.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased approximately $16.3 million, or 11%, to $158.6 million for the three months ended June 30, 2010 from $142.3 million for the three months ended June 30, 2009. Selling expenses increased by approximately $11.9 million, or 16%, for the three months ended June 30, 2010 compared to the three months ended June 30, 2009. The increase in selling expenses is primarily attributable to an approximate $13.8 million increase in marketing and advertising expenses as well as an approximate $1.4 million increase in employee related costs to support our growth. These increases were partially offset by a $2.9 million decrease in MetroFLASH® expense. General and administrative expenses increased approximately $4.6 million, or 8%, for the three months ended June 30, 2010 as compared to the three months ended June 30, 2009 primarily due to the growth in our business. In addition, stock-based compensation expense included in selling, general and administrative expenses decreased $0.2 million for the three months ended June 30, 2010 as compared to the same period in 2009.
Equipment Revenues. Equipment revenues increased $46.2 million, or approximately 29%, to $207.6 million for the six months ended June 30, 2010 from approximately $161.4 million for the six months ended June 30, 2009. The increase is primarily attributable to an increase in upgrade handset sales to existing customers accounting for approximately $34.9 million as well as a higher average price of handsets activated accounting for approximately $33.0 million. These increases were partially offset by a decrease of $23.9 million that would have been recognized as service revenues but was classified as equipment revenues during the six months ended June 30, 2009, in accordance with ASC 605, because the consideration received from customers was less than the fair value of promotionally priced handsets.
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