10-QPeriod: Q3 FY2012

T-Mobile US, Inc. Quarterly Report for Q3 Ended Sep 30, 2012

Filed October 30, 2012For Securities:TMUSTMUSZTMUSITMUSL

Summary

MetroPCS Communications, Inc. reported its financial results for the third quarter of 2012. The company experienced a decrease in service revenues year-over-year, primarily due to customer losses and a slight reduction in average revenue per user. However, equipment revenues saw a significant increase, driven by higher average handset prices. Operationally, MetroPCS's income from operations saw a substantial increase, largely attributed to a decrease in cost of equipment and a gain on settlement of certain litigation. The company's net income more than doubled compared to the prior year's third quarter. The company also provided key performance indicators such as ARPU, churn, CPGA, and CPU, noting a slight increase in CPGA and a decrease in CPU. A significant event disclosed is the announcement of a definitive Business Combination Agreement to combine with T-Mobile, expected to close in the first half of 2013.

Financial Highlights

52 data points
Beta

Revenue

$4.89B

86.9% Gross Margin

Net Income

-$7.74B

-158.1% Net Margin

EPS (Diluted)

$-14.45

Total Assets

$10.07B

Cash & Equivalents

$430.00M

Free Cash Flow

$81.00M

Financial Statements
Beta
Revenue$4.89B
Cost of Revenue$638.97M
Gross Profit$4.25B
SG&A Expenses$163.41M
Operating Expenses$12.49B
Operating Income-$7.59B
Interest Expense$0
Net Income-$7.74B
EPS (Basic)$-14.45
EPS (Diluted)$-14.45
Shares Outstanding (Basic)535.29M
Shares Outstanding (Diluted)535.29M

Key Highlights

  • 1Service revenues declined by 1% year-over-year for the three months ended September 30, 2012, while equipment revenues increased by 85%.
  • 2Total revenues increased by 4% to $1.26 billion for the quarter.
  • 3Income from operations rose significantly by 65% to $292.2 million.
  • 4Net income surged by 178% to $192.7 million.
  • 5The company reported a net customer loss of 312,291 for the three months ended September 30, 2012, compared to net additions of 69,384 in the prior year.
  • 6Average monthly churn improved to 3.7% from 4.5% year-over-year.
  • 7A Business Combination Agreement to combine with T-Mobile was announced on October 3, 2012, expected to close in the first half of 2013.

Frequently Asked Questions

MetroPCS showed a mixed financial performance trend. While service revenues slightly decreased, equipment revenues significantly increased, leading to a 4% rise in total revenues. Operationally, income from operations and net income saw substantial year-over-year growth, driven by cost efficiencies and a one-time gain from a settlement. However, the company experienced a net loss of customers during the quarter.

The filing mentions a definitive Business Combination Agreement to combine with T-Mobile, announced on October 3, 2012. This merger was a subsequent event to the reporting period and its full financial impact would be reflected in future filings. However, the report notes that the transaction is subject to various conditions and approvals, with an expected closing in the first half of 2013.

MetroPCS experienced a net loss of 312,291 customers during the third quarter of 2012, a reversal from net customer additions in the same period last year. Despite this customer loss, the average monthly churn rate improved, decreasing from 4.5% in Q3 2011 to 3.7% in Q3 2012, suggesting better customer retention relative to the customer base size.

The significant increase in equipment revenues (85% year-over-year) was primarily driven by higher average prices of handsets sold, which contributed $70.2 million. Additionally, a decrease in commissions paid to independent retailers due to a lower volume of handsets sold also contributed positively. These factors were partially offset by a decrease in gross customer additions and fewer upgrade handset sales.