MetroPCS Communications Inc. (PCS, Financial) filed Quarterly Report for the period ended 2010-09-30.
Metropcs Communications Inc. has a market cap of $4.05 billion; its shares were traded at around $11.37 with a P/E ratio of 19.8 and P/S ratio of 1.2. PCS is in the portfolios of Wilbur Ross of Invesco Private Capital, Inc., Bruce Kovner of Caxton Associates, Columbia Wanger of Columbia Wanger Asset Management, Paul Tudor Jones of The Tudor Group, George Soros of Soros Fund Management LLC.
We sell products and services to customers through our Company-owned retail stores as well as indirectly through relationships with independent retailers. Our service allows our customers to place unlimited local calls from within our local service area and to receive unlimited calls from any area while in our local service area, for a flat-rate monthly service fee. In January 2010, we introduced a new family of service plans, which include all applicable taxes and regulatory fees, offering nationwide voice, text and web services beginning at $40 per month. For an additional $5 to $20 per month, our customers may select alternative service plans that offer additional features on an unlimited basis. For additional usage fees, we also provide certain other value-added services. On November 4, 2010, we introduced Metro USAsm which allows our customers for the same rates as we previously charged to use our voice, text messaging and web browsing services in an area of over 280 million population through a combination of our own networks and roaming arrangements with third parties. All of these plans require payment in advance for one month of service. If no payment is made in advance for the following month of service, service is suspended at the end of the month that was paid for by the customer and, if the customer does not pay within 30 days, the customer is terminated. Our service plans differentiate us from the more complex plans and long-term contract requirements of traditional wireless carriers. In addition, the above products and services are offered by us under the MetroPCS brand in the metropolitan areas where we purchase services from Royal Street. We introduced the first commercial 4G LTE service in our Las Vegas and Dallas/Fort Worth metropolitan areas in September 2010, in our Detroit metropolitan area in October 2010 and in our Los Angeles and Philadelphia metropolitan areas in November 2010. Our 4G LTE service plans offer talk, text and 4G web access starting as low as $55 per month including taxes and regulatory fees.
Income Taxes. For the three and nine months ended September 30, 2010 and 2009, we paid no federal income taxes. For the three months ended September 30, 2010 and 2009 we paid $0.1 million and $0.2 million in state income taxes, respectively. For the nine months ended September 30, 2010 and 2009 we paid approximately $2.4 million and $2.8 million in state income taxes, respectively.
Equipment Revenues. Equipment revenues decreased $4.7 million, or approximately 6%, to $78.5 million for the three months ended September 30, 2010 from $83.2 million for the three months ended September 30, 2009. The decrease in equipment revenue is primarily driven by a lower average price of handsets activated accounting for approximately $15.8 million, coupled with approximately $12.5 million that would have been recognized as service revenues but was classified as equipment revenues during the three months ended September 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. These decreases were partially offset by an increase in upgrade handset sales to existing customers accounting for approximately $22.5 million.
Cost of Equipment. Cost of equipment increased approximately $57.2 million, or approximately 29%, to approximately $256.3 million for the three months ended September 30, 2010 from approximately $199.1 million
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased approximately $9.0 million, or 6%, to $147.4 million for the three months ended September 30, 2010 from $138.4 million for the three months ended September 30, 2009. Selling expenses increased by $0.4 million, or approximately 1%, for the three months ended September 30, 2010 compared to the three months ended September 30, 2009. General and administrative expenses increased approximately $9.0 million, or approximately 17%, for the three months ended September 30, 2010 as compared to the three months ended September 30, 2009 primarily due to the growth in our business.
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Metropcs Communications Inc. has a market cap of $4.05 billion; its shares were traded at around $11.37 with a P/E ratio of 19.8 and P/S ratio of 1.2. PCS is in the portfolios of Wilbur Ross of Invesco Private Capital, Inc., Bruce Kovner of Caxton Associates, Columbia Wanger of Columbia Wanger Asset Management, Paul Tudor Jones of The Tudor Group, 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/Fort 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 September 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 $1.2 billion through September 30, 2010. Royal Street has incurred an additional $14.0 million in net borrowings through October 31, 2010. Under that certain Amended and Restated Limited Liability Company Agreement of Royal Street Communications, LLC, or the Royal Street agreement, 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. On April 26, 2010, we received a written notice from C9 that it was exercising its put in accordance with the Royal Street agreement 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. The put is subject to customary closing conditions, including consent of the Federal Communications Commission, or FCC, which was granted on October 8, 2010, but has not yet become final.We sell products and services to customers through our Company-owned retail stores as well as indirectly through relationships with independent retailers. Our service allows our customers to place unlimited local calls from within our local service area and to receive unlimited calls from any area while in our local service area, for a flat-rate monthly service fee. In January 2010, we introduced a new family of service plans, which include all applicable taxes and regulatory fees, offering nationwide voice, text and web services beginning at $40 per month. For an additional $5 to $20 per month, our customers may select alternative service plans that offer additional features on an unlimited basis. For additional usage fees, we also provide certain other value-added services. On November 4, 2010, we introduced Metro USAsm which allows our customers for the same rates as we previously charged to use our voice, text messaging and web browsing services in an area of over 280 million population through a combination of our own networks and roaming arrangements with third parties. All of these plans require payment in advance for one month of service. If no payment is made in advance for the following month of service, service is suspended at the end of the month that was paid for by the customer and, if the customer does not pay within 30 days, the customer is terminated. Our service plans differentiate us from the more complex plans and long-term contract requirements of traditional wireless carriers. In addition, the above products and services are offered by us under the MetroPCS brand in the metropolitan areas where we purchase services from Royal Street. We introduced the first commercial 4G LTE service in our Las Vegas and Dallas/Fort Worth metropolitan areas in September 2010, in our Detroit metropolitan area in October 2010 and in our Los Angeles and Philadelphia metropolitan areas in November 2010. Our 4G LTE service plans offer talk, text and 4G web access starting as low as $55 per month including taxes and regulatory fees.
Income Taxes. For the three and nine months ended September 30, 2010 and 2009, we paid no federal income taxes. For the three months ended September 30, 2010 and 2009 we paid $0.1 million and $0.2 million in state income taxes, respectively. For the nine months ended September 30, 2010 and 2009 we paid approximately $2.4 million and $2.8 million in state income taxes, respectively.
Equipment Revenues. Equipment revenues decreased $4.7 million, or approximately 6%, to $78.5 million for the three months ended September 30, 2010 from $83.2 million for the three months ended September 30, 2009. The decrease in equipment revenue is primarily driven by a lower average price of handsets activated accounting for approximately $15.8 million, coupled with approximately $12.5 million that would have been recognized as service revenues but was classified as equipment revenues during the three months ended September 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. These decreases were partially offset by an increase in upgrade handset sales to existing customers accounting for approximately $22.5 million.
Cost of Equipment. Cost of equipment increased approximately $57.2 million, or approximately 29%, to approximately $256.3 million for the three months ended September 30, 2010 from approximately $199.1 million
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased approximately $9.0 million, or 6%, to $147.4 million for the three months ended September 30, 2010 from $138.4 million for the three months ended September 30, 2009. Selling expenses increased by $0.4 million, or approximately 1%, for the three months ended September 30, 2010 compared to the three months ended September 30, 2009. General and administrative expenses increased approximately $9.0 million, or approximately 17%, for the three months ended September 30, 2010 as compared to the three months ended September 30, 2009 primarily due to the growth in our business.
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