MetroPCS Communications Inc. (PCS), the sixth-largest prepaid wireless service operator in the U.S., launched its first 4G Long-Term Evolution (LTE) wireless broadband service and dual-mode smartphone (designed to run on LTE and CDMA networks) in Las Vegas.
 
MetroPCS is the first mobile operator to offer LTE services in the United States through a partnership with Samsung Telecommunications America. It offers the first commercially available LTE enabled handset, the “Samsung Craft”.
 
Leading carriers across the globe have adopted LTE as the base technology standard for 4G owing to its capabilities of speedily transferring data and handling bandwidth-intensive applications. Downlink and uplink speeds of 100 Mbps and 50 Mbps, respectively, offered by LTE are faster than other leading 4G standards including WiMax.
 
The company is a way ahead of its Tier-1 competitors, Verizon (VZ) and AT&T (T) in launching LTE services. Verizon plans to launch its 4G wireless network based on LTE later in the year, while AT&T is expected to roll out 4G LTE services in 2011.
 
The company has plans of launching 3–5 handsets in the next 12 month. The company will also deploy its 4G LTE network in three other cities of U.S. later in the year. MetroPCS plans to expand 4G LTE coverage in its remaining markets in 2011, along with the launch of attractive features in smartphones and 4G handsets.
 
We believe MetroPCS is one of the key beneficiaries of the ongoing fixed-to-mobile transition trend. By moving to 4G LTE and offering super-fast mobile broadband experience on their handsets, the company will encourage customers to discontinue wireline broadband, representing an encouraging opportunity to improve customer retention. Moreover, the ultra-high bandwidth multimedia data applications available through the 4G LTE network will boost revenue per user through increased minutes of use. 
 
MetroPCS remains one of the lowest cost wireless service providers in the U.S. This enables the company to roll out a range of cheap service plans. Despite its leadership in the unlimited prepaid segment, MetroPCS is currently struggling with a high churn (customer switch). However, MetroPCS competes head-to-head with its archrival Leap Wireless (LEAP). The carrier has also been increasingly challenged by the aggressive rollout of competitive discounted service plans by some of its larger peers such as Sprint Nextel’s (S) Boost Mobile and America Movil’s (AMX) Tracfone.
 
We are currently maintaining our Neutral rating on MetroPCS supported by the Zacks #3 (Hold) Rank.
 
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