MetroPCS ‘Solely Focused’ on T-Mobile Deal For Now

Laying the groundwork for combining MetroPCS and T-Mobile operations has begun, though Linquist didn’t rule out talks with other telecoms. There’s been speculation Sprint Nextel, being acquired by Softbank, was preparing a counteroffer for MetroPCS, but some analysts have downplayed the possibility. Sprint’s board in February reportedly turned down CEO Dan Hesse’s plan to buy MetroPCS for $8 billion, but some analysts have suggested the carrier might revive talks with the additional funding Softbank could provide.

T-Mobile parent Deutsche Telecom proposed in October paying MetroPCS shareholders $1.5 billion cash in a deal that would close by mid-2013. The deal is undergoing Justice Department review, and MetroPCS shareholders will likely meet in February or March to vote on it, MetroPCS Chief Financial Officer Braxton Carter said. MetroPCS will combine its networks, including 3G and 4G, with T-Mobile by 2014 and fully switch subscribers to the T-Mobile service a year later, Carter said. MetroPCS had 9.1 million subscribers Sept. 30. In keeping options with other telecoms open, MetroPCS realizes that during next five to 10 years further wireless consolidation “will very likely” occur, Linquist said. “We are preserving our rights” to consider other potential offers, he said. “Right now we are dancing with the one that brought us until we have an obligation to do something else."

The switch from MetroPCS’s CDMA-based 3G handsets to T-Mobile’s GSM/HSPA+ cellphones will occur within “a few months” of the merger being completed, Carter said. T-Mobile plans to “re-farm” MetroPCS 1900 MHz CDMA spectrum for HSPA+ services, he said. Much of the combined focus will be on 4G, where the companies share the 1700/2100 MHz band and T-Mobile expects to have a 20 x 20 MHz LTE network in place by 2014, Linquist said. MetroPCS is testing 20 x 20 MHz in the Dallas market and has registered a “significant improvement” in service quality, Linquist said. T-Mobile will have 10 x 10 MHz LTE in place by late 2013, with 200 million points of presence, he said.

MetroPCS has seen growing demand for 4G, having gained 1.7 million subscribers through November, up from 1.25 million the previous month, Braxton said. More than 50 percent of 4G subscribers take a no-contract unlimited plan carrying a $55 monthly fee, Carter said. Less than 10 percent of MetroPCS’s 4G customers take the $30 monthly plan with a data cap, he said. Following the proposed deal, MetroPCS’s major markets will average 83 MHz of spectrum, up from 22 MHz, and the combined networks will have 280 million points of presence, MetroPCS executives have said. MetroPCS also will be extended into Minneapolis, New Orleans and Seattle for the first time. MetroPCS will start prepaid service in those markets in 2013, Carter said.

Post-merger, T-Mobile’s brand will replace MetroPCS, Linquist said. It hasn’t been decided whether the newly merged company will continue to push MetroPCS’s no-contract strategy, Carter said. The no-contract cellular business has a “great growth opportunity” ahead and has delivered 35 percent gross profit margins for MetroPCS, Linquist said. MetroPCS hopes to “maintain and strengthen the impact” no-contract plans have on the combined business, he said.

MetroPCS is the sole carrier offering Samsung Galaxy S Lightray 4G that can deliver the Dyle mobile DTV service. Smartphones aren’t “a significant part of what we are doing,” due to its no-contract, $459 price, Carter said. The 4G service starts at a $40 monthly fee. The Lightray features a 4.3-inch AMOLED display, 1 GHz processor, 1.7 GB memory, 1,600-milliampere battery with 3.3-hour talk time, eight-megapixel digital camera and 4G mobile hotspot. “It’s good for our brand, but as expensive as those things are, it’s not a huge part of our business,” Carter said. The Lightray is available in MetroPCS’s Hartford, Conn.; Jacksonville, Fla.; and Sacramento, Calif., markets, regions that have “minimal or no” Dyle mobile DTV reception, according to the MetroPCS website. While MetroPCS is carrying two smartphones, capable of delivering voice over LTE (VoLTE), including the LG Connect 4G ($349), it’s more for “seeding the market,” Carter said. Under T-Mobile, “there isn’t as much of a need to do it as quickly as we have done,” Carter said. MetroPCS introduced VoLTE technology in the Dallas market in August. VoLTE transmits calls over the LTE data network. Verizon also has been in VoLTE trials since February 2011.

UBS Conference Notebook

The current generation of TiVo DVRs may be the last set-tops Virgin Media deploys, as features move to a cloud-based service in the “medium term,” Virgin Chief Financial Officer Eamonn O'Hare said Wednesday at the UBS conference in New York. Virgin has 1.2 million TiVo subscribers, up from one million Sept. 30, using set-tops with 500 GB and one terabyte storage capacities. Virgin also is developing non-DVR set-tops using the TiVo user interface, although the timing for introducing them hasn’t been set, O'Hare told us. “The rollout of the TiVo set-tops we are putting in place today may be the last TiVo set-tops deployed by Virgin Media because the two, three or four years it will take to get most of our customers onto the TiVo experience will come against the time frame of having more network-based services and direct streaming to consumers,” O'Hare said. TiVo DVRs have been installed with 30 percent of Virgin subscribers in the past year. Virgin expects to have two million TiVo subscribers within a “couple years,” O'Hare said. Virgin edged into the non-DVR space with the introduction in November of TiVo TV Anywhere app that can be downloaded to Apple and Android devices. O'Hare declined to disclose the number of downloads thus far of the free app for Virgin subscribers. But the non-DVR TiVo is “starting to play out in that, with TV Anywhere, it’s all about the TiVo interface on your iPad or Samsung Galaxy and that’s a potent feature where content resides,” O'Hare said. Virgin will impose a 5 percent price increase in February. Most entry-level packages will be unchanged, with higher-end packages with Sky channels taking the brunt of the increase, O'Hare said. Virgin is testing enabling phone calls over a Wi-Fi network, both in the home and public hotspots, O'Hare said.