One of the leading wireless providers in the U.S., MetroPCS Communications (PCS) has rolled out unlimited music plans for its subscribers. The company joined hands with subscription music provider Rhapsody to offer unlimited access to 12 million tracks.
The offer comes with unlimited voice, text and data plan on Google’s (GOOG) Android-based smartphones for $60 per month.
The company’s latest plan is inspired by the success story of Muve Music, a unlimited music plan offered by Cricket Wireless, a subsidiary of Leap Wireless (LEAP). Within a month after its launch in January 2011, Muve Music wooed 100,000 new subscribers to Cricket Wireless.
MetroPCS remains well positioned to gain significant market traction for its new launch given its subscriber growth rate of approximately 33%and attractive fixed-rate, unlimited price plans that comes with no contract. This differentiates MetroPCS’ from the Tier-1 national wireless broadband carriers that typically require subscribers to sign up for long-term agreements (post-paid contracts). Furthermore, the company remains one of the cheapest providers of fixed-price service plans.
We believe the launch of the music plan will support company’s intent to launch “Android for All” in 2011 and enforce a change from cellphone to smartphone in the mass market. As the Internet is increasingly becoming mobile, subscribers prefer smartphones for entertainment and social networking. Hence, the company remains optimistic about higher demand for such handsets in the near term and plans to introduce an array of touchscreen Android-based smartphones.
We are currently maintaining our long-term Neutral rating on MetroPCS with a Zacks #3 Rank (Hold).
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