MetroPCS Grows As Economy Shrinks

metroPrepaid mobile phone provider MetroPCS (s PCS) today reported profits of $14.6 million for the fourth quarter on sales of $723.6 million. The carrier didn’t meet Wall Street earnings expectations after writing down more than $90 million in auction rate securities, but it has added a significant number of new subscribers thanks to its expansion into new markets and the economic turmoil driving folks to consider pre-paid phone plans.

MetroPCS added 519,519 new subscribers in the fourth quarter — its best quarter ever for subscriber additions. New subscribers during the last three months of the year comprised 37 percent of its 1.4 million net adds for the year. During the fourth quarter, 73 percent of new subscribers were from new markets. On an annual basis, 12 percent of Metro PCS growth came from its core markets and 83 percent from expansion markets.

It also plans to continue its growth into new markets (most recently launched were New York and Boston), although it said it would reduce capital expenditures for 2009 to $700-900 million, compared with spending of $1.2 billion last year.

The economy may be working its favor, but the two smaller U.S. carriers, T-Mobile and Sprint (s S) are ratcheting up the pressure with Sprint’s $50 unlimited data and talk plan through its Boost Mobile subsidiary and T-Mobile’s $50-a-month retention plan.

Economy Slows, PrePaid Mobile Grows

Last week, Stacey came up with five reasons to consider prepaid mobile phone calling plans, especially in these tough economic times. Some wondered why we wrote about that topic, and to them we say: look at the recent trends. There is growing body of evidence that the demand for wireless services is dipping, especially in the growth of post-paid subscriptions, a trend that was first evidenced in the 3Q 2008 and has continued since then.

Service Providers New Pre-Paid Adds
MetroPCS 249,000
Leap Wireless 155,000
T-Mobile 377,000
Tracfone 341,000
Verizon Wireless 90,000

On the flip side, there is a growing demand for unlimited prepaid services, and that is helping budget service providers like Tracfone (s AMX), Leap (s LEAP) and Metro PCS (s PCS). A UBS report suggests that they are in fact beating down the national phone companies. Data collected by UBS research group shows that there are 45 million prepaid subscribers in the U.S. representing 17 percent of total customers. In the third quarter of 2008, 870,000 new pre-paid subscribers were added to the ranks, with national carriers (Sprint (s S) & AT&T (s T) were big losers) adding only about 120,000. If you look at the table, it is evident that some of the smaller players are doing relatively well as a large part of the population looks to saving money on everything — from heating bills to wireless phones to broadband connections.

5 Reasons to Consider Prepaid Phone Plans

These days, everyone’s looking for another way to cut costs. One relatively painless way is to make the switch to a prepaid cell phone plan. According to 2008 data from the Cellular Telephone Industry Association, of the 262 million cell phone subscribers in the U.S., only 16.9 percent of them are on prepaid plans. Here are five reasons that a prepaid plan might be right for you.

Carriers Looking to Block Free Wireless Broadband?

Update: TR Daily reports that the vote will be delayed because of “misunderstanding” which loosely translates into lobbyists did their job and got FCC to back up. FCC has taken the vote off the website. I will report more tomorrow as I get the details. (Original story below the fold.)

Original Story: FCC Chairman Kevin Martin’s political ambitions might spur him into delivering “free wireless broadband,” if some Beltway insiders are to be believed. His plan, however, is not sitting well with carriers, satellite operators and even some public interest groups.

What Martin wants to do is basically have another auction of advanced wireless services (AWS-3) in the 2155-2175 MHz-band and reserve a portion of the wireless network that uses these frequencies for free wireless broadband. The plan was first reported by The Wall Street Journal. The FCC is likely to vote on Martin’s idea of delivering 768 kbps wireless broadband access for free next week. I’ve been told the date is June 12th.

Read More about Carriers Looking to Block Free Wireless Broadband?