10-QPeriod: Q1 FY2011

T-Mobile US, Inc. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:TMUSTMUSZTMUSITMUSL

Summary

MetroPCS Communications, Inc. (TMUS) reported strong revenue growth in its first quarter of 2011, with total revenues increasing by 23% year-over-year to $1.19 billion. This growth was driven by a 23% increase in both service and equipment revenues, reflecting a robust customer base expansion. The company added over 725,000 net new customers, bringing its total subscriber count to nearly 8.9 million. Despite increased operating expenses, including a 30% rise in the cost of equipment and a 19% increase in depreciation and amortization, MetroPCS demonstrated significant operational leverage. Income from operations grew by 38% to $145.3 million. Net income more than doubled, increasing by 149% to $56.4 million, aided by a reduction in interest expense. The company maintained a strong liquidity position with approximately $1.7 billion in cash, cash equivalents, and short-term investments at quarter-end.

Financial Highlights

51 data points
Beta

Revenue

$1.19B

37.1% Gross Margin

Net Income

$56.38M

4.7% Net Margin

EPS (Diluted)

$0.30

Total Assets

$8.65B

Cash & Equivalents

$1.86B

Free Cash Flow

-$48.72M

Financial Statements
Beta
Revenue$1.19B
Cost of Revenue$750.68M
Gross Profit$443.70M
SG&A Expenses$169.77M
Operating Expenses$1.05B
Operating Income$145.34M
Interest Expense$56.56M
Net Income$56.38M
EPS (Basic)$0.32
EPS (Diluted)$0.30
Shares Outstanding (Basic)178.49M
Shares Outstanding (Diluted)180.70M

Key Highlights

  • 1Total revenues increased by 23% to $1.19 billion in Q1 2011 compared to Q1 2010.
  • 2Net customer additions were strong at 725,945 in Q1 2011, contributing to an 8,881,055 total customer base.
  • 3Income from operations saw a significant increase of 38% year-over-year.
  • 4Net income more than doubled, growing by 149% to $56.4 million.
  • 5Cash, cash equivalents, and short-term investments totaled approximately $1.7 billion at the end of the quarter.
  • 6The company reported a decrease in average monthly churn rate to 3.1% from 3.7% in the prior year period.
  • 7Average Revenue Per User (ARPU) increased to $40.42 from $39.83 year-over-year.

Frequently Asked Questions

MetroPCS Communications, Inc. operates as a wireless telecommunications carrier, offering wireless broadband mobile services primarily in selected major metropolitan areas across the United States. Their target market includes consumers seeking unlimited voice, text, and web services at competitive flat-rate monthly fees, often without long-term contract requirements.

MetroPCS experienced significant revenue growth. Total revenues increased by 23% to $1.19 billion for the three months ended March 31, 2011, compared to $970.5 million for the same period in 2010. This growth was driven by increases in both service revenues and equipment revenues, reflecting strong customer acquisition and higher upgrade handset sales.

MetroPCS maintains a strong liquidity position. As of March 31, 2011, the company had approximately $1.7 billion in cash, cash equivalents, and short-term investments. Management believes this, along with anticipated cash flows from operations, is sufficient to fund near-term operations and planned expansions.

Key risks include the high churn rate due to the lack of long-term contracts, increased competition from industry consolidation, dependence on network technology improvements (like 4G LTE) and potential delays or incompatibilities, and the potential impact of regulatory changes on roaming agreements. The company also faces challenges in securing necessary spectrum and keeping pace with technological advancements.