MetroPCS saw its profits more than double in the first quarter as customers flocked to its new Android-based smartphones and LTE service.
The prepaid carrier said its net income rose to $56 million for the first quarter ended March 31, 2011, compared to profits of $23 million during the same period last year. Sales increased 23 percent to $1.2 billion.
The company added 725,000 net new customers during the quarter, bringing its total subscriber base to 8.9 million subscribers. The net adds beat analysts’ consensus estimate of 440,000 net new customers.
“This is a tremendous rate of growth in a very competitive industry,” MetroPCS COO Tom Keys said in an earnings call today.
Keys attributed the growth to the popularity of the company’s Android smartphones and LTE service, as well as an ongoing shift toward prepaid services. MetroPCS has deployed LTE service in all of its metropolitan markets and currently offers two handsets compatible with the service, the Brew-based Samsung Craft and the Android-based Samsung Galaxy Indulge.
Nearly one-third of MetroPCS’ new customers bought one of the company’s Android smartphones during the first quarter, the company said during its earnings call. In addition to the Galaxy Indulge, MetroPCS offers four Android smartphones, including the LG Optimus M and two versions of the Huawei Ascend.
Keys also said that MetroPCS is seeing some contract customers switch over to its prepaid services: between 30 percent and 40 percent of the company’s new customers report they’ve previously been on contracts.
“We certainly think there’s a migration of contract customer who find us appealing,” Keys said.
Rising adoption of the company’s Wireless for All rate plans and its LTE service boosted ARPU 59 cents to $40.42. The plans also helped MetroPCS retain more customers, and churn dropped six-tenths of a percentage point to 3.1 percent.
Bernstein Research analyst Craig Moffett said MetroPCS’ earnings, in addition to Sprint’s strong prepaid results last week, were a sign that the prepaid segment has “gotten its mojo back.”
“Credit MetroPCS’s strategy of focusing on smartphones for their core urban demo,” analysts from Bernstein Research said in a report. “Everything in today’s earnings report – higher subscribers, higher ARPU, lower churn, and, yes, higher costs – speaks to a company transitioning from low-end voice only service to a full-fledged wireless smartphone carrier.”
Looking forward, MetroPCS warned that its results may be less rosy in the second and third quarter of this year, which tend to produce lower net adds and rising churn. The company also cautioned that rising gas prices, rising unemployment and ongoing troubles in the housing market could affect its results over the next six months, since the company’s customer base is particularly susceptible to macroeconomic conditions.
Investors seemed unconcerned about the cautious outlook. MetroPCS stock rose more than 6 percent to $17.53 in morning trading on the New York Stock Exchange.