MetroPCS Communications Inc. (PCS) is all set to woo its customers by adding content from ABC Entertainment. The company has recently joined hands with ABC, to bring ABC and subsidiary lifestyle content such as Disney Channel, Disney XD and ESPN on all its 4G handsets via MetroSTUDIO video on-demand application. The deal terms were however not disclosed.
The company’s MetroSTUDIO was launched in September 2010 to enhance customers’ entertainment experience. The addition of new content from ABC Television Group is expected to attract more customers and provide competitive advantage against market veterans like AT&T Inc. (T) and Verizon (VZ). Further, MetroPCS wireless data services remain powered by superior 4G LTE technology, which is rapidly becoming the standard platform for communication across the globe.
In fact, MetroPCS was the first wireless carrier to offer 4G service as well as introduce the world’s first 4G Android-based smartphone from Samsung. MetroPCS currently offers three 4G LTE service plans — the $40 service plan, the $50 service plan and the $60 service plan.
MetroPCS provides 4G LTE services primarily in selected major metropolitan areas in the U.S., including Atlanta, Boston, Dallas/Fort Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco and Tampa/Sarasota and plans to cover majority of the other metropolitan cities in the U.S. by the end of the year. Further, the the company focuses on introducing “4G LTE for All” services over the long term.
Hence, we believe continuous subscriber growth coupled with the rollout of attractive wireless plans and strong product portfolio will act as tailwinds for MetroPCS going forward.
However, we believe the highly leveraged balance sheet, higher promotional expenses for rolling out new service plans and new smartphone offerings, increased churn rates, competitive market, and regulatory issues may limit the company’s upside potential.
We thus, maintain our long-term Neutral recommendation on MetroPCS Communications Inc. Currently, MetroPCS Communications has a Zacks #3 Rank, implying a short-term Hold rating.
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