2013

Sabrina Franco
Leah Kossak
Orsola Leo
Eugene Tkatch
Grace Zhou

[METROPCS: PHASE II]

Table of Contents

1.1

Introduction....4

2.1

Market Research ....6

2.2

Environmental Scanning/Factors........6

2.3

Demographics......6

2.4

Economic Factors........7

2.5

Trends and Forces...7

2.6

Summary/Changes......8

3.1

Socio-Cultural Context ..10

3.2

Business Environment ...10

3.3

Supply Chains ....11

3.4

Industry Structure ..11

4.1

Industry Statistics....12

4.2

Competitive Intelligence ....12

5.1

Porters Forces....13

5.1

Industry Trends/ Environmental Factors.15

7.0

SWOT Analysis...16
Phase II Introduction.19

2.3

Performance...20

3.5

Service Sector Analysis.20

Appendix15

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1.1 Introduction
MetroPCS is a prepaid wireless service in the US. It is one of the top providers of
unlimited 4G LTE wireless service with no annual contract. They offer, unlimited talk, text, and
data plans with all the applicable taxes and fees includedso there are no surprises. MetroPCS
utilizes manufactures smartphones, such as Androids, and services such as Mobile Hotspot and
Rhapsody Unlimited Music. In April 3013, MetroPCS shareholders approved the companys
merger with T-Mobile (owned by Deutsche Telekom AG), the deal closed in early May1.
We have decided to choose MetroPCS because, although T-Mobile has taken over the
company which was about to go under Metro is still not improving and stock is dipping to alltime lows. In addition to that bad news, Metro is one of the companies that is predicted to vanish
by the end of 2014. T-mobile expanded Metros prepaid reach into at least 15 different markets
and allows Metro to use T-Mobiles LTE service which means better coverage for Metro prepaid
customers. MetroPCS is basically serving as a prepaid service arm to T-mobile but it looks like
that alone will not be enough for Metro to survive. MetroPCS does fulfill a gap in the market, for
people who do not need a family plan or a contract phone, and this gap is not being filled by
many other carriers. With its new collaboration with T-Mobile, MetroPCS will be able to cover
more places with service, and there can be an improvement if there is a good marketing strategy
to help them. Metro needs to change the product, the way it promotes service and tweak the
pricing as well in order to service.
MetroPCS is offering a new unlimited talk/text plan from $40$60. The different price
indicates increasing amount of data the customer can use with 4G data, music, video, photo and

(http://www.metropcs.com/metro/aboutus/,
http://bankruptcynews.dowjones.com/Article?an=DJFHYW0020130424e94ohwfx0&cid=32135013&ctype=ts&pid=314&ReturnUrl=http%3a%2
f%2fbankruptcynews.dowjones.com%2fArticle%3fan%3dDJFHYW0020130424e94ohwfx0%26cid%3d32135013%26ctype%3dts%26pid%3d31
4)

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app downloads. It is obvious that the company is tempting the customer to at least upgrade to the
$50 package, since there are significant differences between the allowed data of the $50 package
and the $40 package. For the $40 package, the 4G data is limited to 500 MB, but it jumps to 2.5
GB with just $10 more. That is a 500% increase of 4G data for 25% increase of price. All the
other allowed data way surpass the amount of increased pay. For all of the packages, adding up
to 5 lines in a Family Plan cost $5 for each line. MetroPCS may also appeal to people who do not
want contracts with their cell phone company. Payments are given on a monthly basis.
The biggest competitors for MetroPCS are Verizon, AT&T, T-Mobile, and Sprint. Its
stocked decreased from a 52-week of $17.84 to $5.86. They are also not getting very many
customers, gaining only 131,654 net subscribers in the quarter of June 2012.
Since its official mergence with T-Mobile, analysts have predicted that this could result in an
improved business risk assessment as a result of a larger scale, including greater operating
efficiency, better equipment pricing, as well as more spectrum to accommodate the upgrade of
the combined network LTE2.
With the combination of these two companies, other large carriers such as Verizon (who
had recorded revenues of $115,846 million in 2012) and AT&T (who had recorded revenues of
$127,434 million in 2012), are going to have more competition as far as locking people into their
contracts3.
In the US, the broadband network overall has had a total revenue of $45.9bn in 2012.
There have been a total of 238.5 million subscribers for all the companies in the US since 2012.

(http://bankruptcynews.dowjones.com/Article?an=DJFHYW0020121003e8a3qrncq&ReturnUrl=http%3a%2f%2fba
nkruptcynews.dowjones.com%2fArticle%3fan%3dDJFHYW0020121003e8a3qrncq)
3
(http://store.marketline.com/Browse/?Ntt=metro+pcs)

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The performance of the market, however, is forecasted to decelerate, with an anticipated CAGR
of 14.4% from 21012-2017. This is predicted to result in a $90.1bn by the end of 20174.
By choosing MetroPCS, we are going to be trying to get this company to fulfill a need in
the broadband network in the US during this 5-year period predicted.

2.1 Market Research

MetroPCS is known for targeting youth and minority demographics and unlike the other
major wireless carriers such as Verizon or AT&T Metro PCS offers service without requiring a
contract or a credit check. Knowing these facts, it is clear why their market to minorities and
youth is very strong, with their unlimited voice plan that starts at just $30/month it is no wonder
that youth and young professionals form 55% of MetroPCSs customers5.

2.2 Environmental Scanning/Factors

MetroPCS was not particularly affected by the market downfall in the year 2007 and into
2008. Instead, MetroPCS made most of its money during this period and volume was at an alltime high. (Reference stock charts in Appendix A) This information is typical because during the
recession many experienced economic hardship, nevertheless people need their cellphones so
many flocked to MetroPCS which offered the cheapest service with basically the same smart
phones you would get at Verizon or AT&T, however you have to buy the phone from MetroPCS
directly to have their service.

4
5

(http://store.marketline.com/Product/united_states_mobile_broadband?productid=MLIP1077-0007)
(http://www.wikinvest.com/stock/MetroPCS_%28PCS%29)

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2.3 Demographics
MetroPCS has many locations within the densely populated areas of urban communities,
this allows Metro to make it easy for any teen to get a cell phone and a plan very easy and cheap,
(Reference Appendix D for map) especially in Boston where our citys student population is
about 250,000 counting Boston and Cambridge alone. Over 50 colleges and universities in the
Boston area attract students from all over the country. This is great news for MetroPCS,
especially knowing that college students are not particularly known to have a lot of money while
in school. However parents of students tend to keep them on their family plan with either
Verizon or AT&6T.
(Refer to Appendix B for table data)
2.4 Economic Factors
Some factors that made Metro a winner in the recession include; customer turnover rate,
average household income, market collapse in 2007, many flocked to MetroPCS because it was
cheap and you did not need a contract. The company spends $124 on average per new customer
added, compared to the industry average of $358. This is good news for Metro but they are still
losing much more on product pricing and are not expanding fast enough.
Customers do not have contracts with MetroPCS, which creates pricing pressure that
intensifies in a recession. The lack of contracts means MetroPCS's customers can easily switch to
alternatives such as landlines, or plans offered by MetroPCS's direct competitors, Cricket/Jump
Mobile and Sprint Boost Mobile, if they view these plans as a better value7. MetroPCS has
proven to be in a perfect position during economic downturn. It offers very affordable service
with no contracts that are very flexible. When looking at the volume of cellphones the company

6
7

(http://www.bu.edu/metinternational/discover/city-of-boston/)
http://www.wikinvest.com/stock/MetroPCS_%28PCS%29 MetroPCS

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sold during its peak year 2007, it is easy to see why many flocked to MetroPCS. However, as
U.S. markets have slowly been coming out of the recession, customers are going to big
companies such as Verizon and AT&T. Some reasons include; bad service, coverage not big, do
not have the latest products, not valued by the consumer as reliable service altogether.

2.5 Trends and Forces

Although the wireless market has matured, MetroPCS believes it still has room to grow
In the United States, 285.6 million people have cell phones, a wireless penetration of 91%.
Companies have to fight for market shares or add services to existing customers, such as data, in
order to drive revenue growth. Benefiting MetroPCS's growth in the past years has been partly
due to the fact that telecom giants such as Verizon Wireless, T-Mobile, and AT&T Wireless
gave practically no attention to the minority and youth markets. However, these wireless
providers began flat rate unlimited service offerings much like what MetroPCS offers8.
Despite the maturing market, MetroPCS believes most of the remaining growth will be in
no contract and low-income demographics. The bad news for MetroPCS is that the telecom
giants have picked up on that as well. Wall Street research indicates 25% of the population
earning between $22,500 and $39,999 per year do not have cellular service, but only 7% of
people with incomes above $90,000 do not.[20] MetroPCS's average customer earns $38,000.
Raymond James Institutional Investor Conference 3/3/08 Further, only 10% of Americans use no-

contract wireless subscriptions, which is relatively low compared to the United Kingdom's 67%,
Italy's 88%, or France's 39%. The research also points out that decreasing discretionary income,
due to rising Food and Gas Prices, can cause consumers to be less confident in their ability to
8

. Leap Wireless (LEAP) Form 10-K FY 2007, "Competition" Page 10-12

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pay long-term contracts, and thus go to companies that offer no contracts. Tmobile recently has
done the same thing, the do not require any contract anymore but they make you pay the full
price for the phone.

2.6 Summary/Changes
MetroPCS has a very small base of customers to work with when compared to the big
companies like Verizon and AT&T. MetroPCS offers very affordable service with no contract,
however Verizon and AT&T are also trying to tap into that market and take away MetroPCSs
customers. This puts MetroPCS at a disadvantage, especially right now when Metros stock has
been going down since mid-2007 and Verizon and AT&T have their stock and volume doing the
opposite. This makes it easier for Verizon and AT&T to offer affordable bundle packages such
as family plans and business plans that MetroPCS simply cannot compete with. If this continues
MetroPCS will simply be choked out slowly if it does not do something to change the way it
markets. Tmobile started offering service with no contracts as well and it proved to be working
because their stock and volume is increasing.
The new 4G LTE service MetroPCS provides is not as good as the other providers
because even though it is basically the same service, the traffic in the urban areas is very heavy.
Verizon and AT&T dominate the towers and service in the cities which creates traffic for the
MetroPCS users since they do not own many towers. MetroPCS offers very affordable service
compared to Verizon and AT&T. This attracts many young people as well as those with low
income. However, the service is not as good, as one might guess compared to Verizon and
AT&T. The way these telecom giants offer compete with MetroPCS is with their family plans
that are very affordable. Many students, especially youth tend to stay under their parents family

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plan. The parents like it because they can use it as leverage when their kids get in trouble, and
the kids love it because the parents pay. Metro needs to have better service, covering much more
ground than just urban areas. It needs to allow people to use their old phones when switching or
provide an exchange program. It needs to do more advertising to its own target market with
youth and minorities because they spread the word better than any advertising. (reference
Appendix C to see the chart)
3.1 Socio-Cultural Context
In regards to socio-cultural context, MetroPCS gravitates more towards those who are a
part of Generation X and onward. In a recent article, MetroPCS was found to charge a $3 fee for
those who want to pay their phone bill in a MetroPCS store. One person analyzed in this article
is a part of the Baby Boomer generation and doesnt have regular computer and can never be
sure at any given time that he has the funds to cover an automatic withdrawal.9 In order for
companies to be successful, they need to cater to all generations in order to have a fluid business
model. It would be helpful if MetroPCS eliminated their paying in store fee in order to make
their customers feel more comfortable with their transactions.

3.2 Business Environment

The business environment that MetroPCS works in is heavily technology based since it
is an electronic communication company. With that said, the work environment is claimed to
have a fast pace yet they [we] know that people like to have fun and work as a team.10 Retail
tends to have long hours and the employees will be dealing with a lot of people, not all of which
are in the best of moods. By Metro PCS acknowledging that the fast pace work environment
9
Lazarus, David. Los Angeles Times, "articles.latimes.com." Last modified September 16, 2013. Accessed September 29, 2013.
http://articles.latimes.com/2013/sep/16/business/la-fi-lazarus-20130917
10
Metro PCS Wireless For All, "www.metropcs.com." Last modified 2013. Accessed September 29, 2013.
http://www.metropcs.com/metro/careers/retail.jsp.

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should be balanced with working in teams as an enjoyable experience. MetroPCS also offers
Paid time away from work for Vacation, Holidays, Sick, and Personal Days.11 Not many retail
jobs offer paid days off; this is more enticing for people to apply to work there and for
employees to stay with the company. Some may argue that profit margins may be affected by
giving employees paid leave, especially in the case where MetroPCS sells cheaper products to
start off, but when the employees are considered, the company has a better infrastructure.
3.3 Supply Chains
MetroPCS has a statement on their website covering supply chain ethics. As we have
reviewed in class, Apple recently has received backlash for the conditions of their factories in
China. MetroPCS has recently taken it upon themselves to ensure that their company stays
within ethical protocol. As part of the statement we [also] plan to include training on slavery
and human trafficking in all of our employee ethics training.12 This is good to include all levels
of employees in the awareness of human trafficking and slavery because compromising ethical
standards towards other human beings is not only wrong, but will compromise the standing of
the company. This statement in regards to supply chains comes from the California
Transparency in Supply Chains Act of 2010 (SB 657) Disclosure.13 Displaying this kind of
acknowledgement towards the importance of ethics will make consumers feel more at ease with
who they are investing in.
As a counter argument, one can say that no technology is 100% ethically obtained. The
phone once completed may be obtained in an ethical way but that the individual parts themselves
are not ethically obtained. In recent years, the media and consumers have been putting a spotlight
11

Metro PCS Wireless For All, "www.metropcs.com." Last modified 2013. Accessed September 30, 2013.
http://www.metropcs.com/metro/careers/benefits.jsp?benefitFrag=Health & Welfare.
metropcs.com." Last modified 2013. Accessed September 29, 2013.
http://www.metropcs.com/metro/tac/termsAndConditions.jsp?terms=California Transparency in Supply Chains Act of 2010 SB 657 Disclosure.
13
Metro PCS Wireless For All, "metropcs.com." Last modified 2013. Accessed September 29, 2013.
http://www.metropcs.com/metro/tac/termsAndConditions.jsp?terms=California Transparency in Supply Chains Act of 2010 SB 657 Disclosure.

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in regards to ethical conflicts with technology and it will continue to be an ongoing process to
eliminate the unethical treatment/workspace technology sources.
3.4 Industry Structure
MetroPCS has a typical business structure of heads in the company and sub groups
accordingly. The COO/ Executive Vice of MetroPCS is Thomas C. Keys, and from there the
business models lists a number of regional heads of finance and operations, networking and
operations, sales and distribution, and regional HR directors.14 The layout helps by using a
regional structure because different regions will have different trend analysis with consumer
sales. This also helps the company on their own accord so that MetroPCS has a way of working
on group structure throughout the company.
Another thing to consider is the recent acquisition of MetroPCS by T-Mobile. The
structure of T-Mobile consists of a board of directors and managers that oversee the company15.
This is a typical company structure where the managers oversee the majority of the work within
the company and if any crucial decisions or rules need to be passed the board of directors are the
highest in the chain of command to talk to.

4.1 Industry statistics

MetroPCS was ranked 490 from its previous 530 ranking in the Fortune 500 listing in
20125. Its leading rival AT&T was ranked number 11 on the same list 5. MetroPCS brought in
revenue valued at $4,847.4 million in mere comparison to AT&T whose revenue totaled
$126,723.0 million the same fiscal year 5. MetroPCSs revenues and profits increased 19.1%

14

Metro PCS Wireless For All, "www.metropcs.com." Last modified 2013. Accessed September 30, 2013.
http://www.metropcs.com/metro/careers/retail.jsp.
15

T-Mobile, "T-Mobile Investor Relations." Last modified 2013. Accessed October 27, 2013. http://investor.tmobile.com/phoenix.zhtml?c=177745&p=irol-IRHome

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then 55.8% from 2010 to 2012 respectively, so there was little growth in the company within that
span of time 5. As of 27 September 2013, MetroPCS had a market value of 18,945.5123 . Its sales
in 2012 was $5,101.278 million 3 . The corporation only had 3,700 employees in 2012 so its
employee growth percent was stagnant at 0%3. Also, its 3,700 employees served over 9.3 million
customers that year 6 . Its assets totaled $10,189.415 million, its net income growth percent was
30.82% and its sales growth percent was 5.24% in 2012 respectively 3 . In these findings, it is
known that MetroPCS needs better means of maintaining employee relationships in order to
improve productivity and boost revenues for years to come.

4.2 Competitive intelligence

MetroPCS decided to merge with another wireless telecommunications industry, TMobile 6. The joined entity will operate under the T-Mobile brand, with plans calling for
MetroPCS customers to be migrated over to T-Mobile's network by 201510. MetroPCS needed to
also integrate its CDMA carrier with T-Mobiles GSM national carrier 6. CDMA (Code Division
Multiple Access) and GSM (Global System for Mobiles) are the two radio systems offered by
the T-Mobile-MetroPCS merger9.
The GSM system allows for unlocked phones to store user information on a SIM card9.
On the other hand, CDMA carriers store user information in the phone itself through network
communications provided by the carriers of the respective brand.9 T-Mobile announced that it
will repurpose MetroPCSs old CDMA carrier for T-Mobiles new 4G LTE (faster GSM)
network10. This way, T-Mobile can offer the latest and fastest service to while still integrating
affordably priced no-contract deals in order compete with its main competitors in the market.

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According to MetroPCSs 10-K filing in 2012, the company outsourced its customer
contact servers in order to decrease operating expenses6. Though this seemed profitable in the
short run, the long run consequences were far more detrimental. Since many American jobs were
lost to those overseas, MetroPCS suffered many profit losses. In retaliation, the Communications
Workers of America (CWA) backed up by the Federal Communications Commission (FCC)
have been representing an estimated 20 million US employees that have been fighting to secure
their job standings and workers-rights since the merger in 201111. Results of this unionization
are still pending and have not yet been announced11.

5.1 How do Porters 5 Forces further shape the companys business?

Porters Five Forces as stated by the Harvard Business Review are rivalry among existing
competitors, threats of new entrants, bargaining power for suppliers, bargaining power of
consumers, and the threat of substitute products or services 1. These key aspects dictate how
industries compete with one another in order to maximize their profits 1. MetroPCS offers
wireless phone service to customers in select metro areas across the US12. MetroPCS rivals with
many competitors, the top three being Cellco Partnership, AT&T Mobility LLC, and Sprint
Nextel Corporation, as claimed by Hoovers 3 .
MetroPCSs merger with T-Mobile allows for a new entrance into the market and also for
opportunities of new innovations in order to compete with other existing telecommunication
industries12. MetroPCS pioneered one flat monthly cost for unlimited service, with no contract12
plans in order to reach a wider target market compared to its competitors. Since there are so
many competitors, the barrier to enter the telecommunications market is relatively low, however,
competition is fierce. MetroPCS used to run on CDMA 2G technology12 but now with so many

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competitors having faster services, MetroPCS now boasts 4G service using LTE technology12,
satisfying consumer demands while still maintaining its original supplier services. Lastly, TMobile is phasing out sales of CDMA/LTE phones in 2013, and introducing GSM/WCDMA/LTE
phones in their place, which are compatible with T-Mobile's existing network12. MetroPCS was
threatened by the consumer market for selling affordable but lower quality phones and slower
network services, but now the industry is substituting better quality products with faster service
in order to counteract the previous threatening forces.

6.0 Industry Trends/Environmental Factors

The impact on the demand of the product comes mostly from the economic factors.
During the market downfall from 2007 and into 2008, Metro PCS was not particularly affected.
Instead, the company made most of its money during the market downfall and volume was at an
all-time high. (Reference stock charts in Appendix A) This is mainly due to people leaving their
more expensive companies in favor of Metro PCSs offering of the same cell phones, but at a
much smaller price [8]. However, once most people regained the financial standing they had
previously, they went back to their old cell phone companies in favor of the quality of service.
The economic downturn shows that there is a market out there for people who wish to pay less,
but they need to have a better quality service provided.
Metro PCS believes most of its returning growth will be in no contract and low-income
demographics. However, other companies are recognizing this as well and are now offering nocontract phones with their services. It is pointed out that the decreasing discretionary income,
due to rising food and gas prices, can cause consumers to be less confident in their ability to pay
long-term contracts, therefore they are more likely to go to companies with no contracts such as

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Metro PCS. T-Mobile has recently tried this, however they require the consumer to pay the full
price for the phone, which can be more than the contracts.
Another important factor to keep in mind is that Metro PCS has many locations within
densely populated areas on urban communities. This makes is simple for the teenagers within
these urban areas to access a cell phone and a plan very easily and cheaply. (Reference Appendix
D for map) Cities like Boston, where the citys student population is about 250,000 in just
Boston and Cambridge alone, have the perfect environment for Metro PCS users. College
students are not known for having a lot of money while in school. However, parents of students
tend to keep them on their family plans with either Verizon or AT&T[6]. (reference Appendix B
for table data) The students that do not keep on their family plans while in college should have a
viable option to getting a cell phone at a reasonable cost while in school. Metro PCS fills this gap
and, since a cell phone is becoming essential to have while in school, it fills it cost-efficiently.

Describes Porters 5 Forces:

http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/
2

Who Leads Wireless Tech Race? MetroPCS I found this periodical which explains what Metro PCS offers and came up with before Verizon or
AT&T did. It also explains why is does not receive any respect from consumers. OL
http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=2&sid=f9b06bea-a127-44ce-8525-d234455fa23f%40sessionmgr13&hid=23
3

Hoovers
http://www.hoovers.com/company-information/cs/sales-preparation.MetroPCS_Communications_Inc.66e87da5d795e210.html
4

YaHoo Finance Metro PCS stock Price

http://finance.yahoo.com/q?s=PCS
5

CNN Money
http://money.cnn.com/magazines/fortune/fortune500/2012/snapshots/11414.html
6

T-Mobile-MetroPCS Merger Means More Jobs Loss, Decline For Workers

http://www.cwa-union.org/news/entry/t-mobile-metropcs_merger_means_more_jobs_loss_decline_for_workers/#.Ukir6tJJM1I
7

MetroPCS Loses Customers

http://finance.yahoo.com/news/metropcs-losses-customers-4q-130854406.html
8

T-Mobile Chief Cant Intimidate: MetroPCS Workers Vote for CWA

http://www.aflcio.org/Blog/Organizing-Bargaining/T-Mobile-Chief-Can-t-Intimidate-MetroPCS-Workers-Vote-for-CWA

Page | 16

CDMA vs. GSM: What's the Difference?

http://www.pcmag.com/article2/0,2817,2407896,00.asp
10

T-Mobile and MetroPCS merger finalized, company to begin trading as 'T-Mobile US'
http://www.theverge.com/2013/5/1/4286622/t-mobile-us-metropcs-merger-complete-tmus
11

Cwa Fights to Protect Jobs in T-Mobile/Metropcs Merger

http://www.loweringthebarforus.org/news/entry/cwa_pushes_for_jobs_in_the_t-mobile-metropcs_merger/

7.0 SWOT ANALYSIS METRO-PCS

Page | 17

STRENGTHS
All inclusive prices for the service
Improved service due to T-mobile
Customer base is reliable (demographics)
Prepaid options/pay at kiosk location
Many small locations in cities

WEAKNESSES
Low market share
Not diversified
Weak, damaged brand
Not reliable service
Small coverage
Limited on new products

OPPORTUNITIES
Online service
Product expansion
Service expansion
Economic Slowdown times

THREATS
Competition
Cheaper technology
Lower cost competitors or imports
Price wars
Large companies buy out new product by
bulk

The strengths of Metro PCS include; having all inclusive prices for the service it
provides. This means the customer can expect to see simple bundles that have everything
included. One of the newest strengths due to the T-mobile merger include better service due to
the T-Mobile towers. Prepaid options and paying the bill in general is very easy and strategically
plays to the needs of the consumer. Customers can easily pay their bill at the many kiosk
locations that are all over the city. Weaknesses include; low market share, Metro not being very
diversified in its product and different service it offers. Small coverage which means it is not the
best service to have if you travel outside of the city frequently. Opportunities include; having

Page | 18

online service, expand the products it offers, expanding the service and cashing in during
economic downturns. Lastly, the threats include having many competitors, price wars from many
competitors to the manufacturers and buying out the product in bulk. What this means is that
device manufacturers like cell phones and tablets can get bought and be out of stock so the small
companies like Metro will not get their product on time which can affect them.
Introduction
MetroPCS is a company that provides wireless service for consumers without the use of
a contract at a more affordable rate in comparison to other wireless companies. MetroPCS has
recently been acquired by T-Mobile, giving consumers the option to go with the parent
companys contract deals or utilize a no contract service at a monthly price. MetroPCS is
relevant in regards to the college student population because no contract cell phone service is
more affordable. Consumers have access to Smartphone from brands such as Nokia and LG,
which is different from other non-contract phones because they are usually basic phone devices.
This company is of interest in regards to tracking as well because T-Mobile has gained the
revenue of MetroPCS, which can allow for company growth on both ends. With the acquisition
and the pre-existing set up for MetroPCS, consumers have flexible options with this company.
Performance
Looking at the parent company of MetroPCS, T-Mobiles stockholders equity and
liabilities surpass the net income of the company as it can be seen within company growth over
the past 3-4 years. With MetroPCS as a newly acquired company, this can help boost T-Mobiles
revenues. MetroPCS has also made improvements with regards to net income though the cash
flows seem to be somewhat unstable over the past three years. In Appendix A, one can see that
the stock of MetroPCS has declined since its peak in 2007 but has remained at the same rate up

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until its acquisition. Marketing efforts have mainly been made through their website since the
company has not run any television ads to advertise themselves. (Refer to Appendix E and F for
current financial standings of T-Mobile and MetroPCS).
Service Sector Analysis
In the world of wireless communication, the big four companies are T-Mobile, Verizon
Wireless, AT&T, and Sprint. Since MetroPCS is owned by T-Mobile, MetroPCS has gained
leverage in the competition. This can appeal to current and potential consumers seeing that they
have an option of either going with T-Mobile or choosing MetroPCS since they are under the
same belt.
MetroPCS has approximately 9 suppliers based on what is listed on their website.16 A
number of these suppliers are from other phone companies as well as suppliers to deal with
phone equipment. Each of these suppliers is crucial in the involvement of MetroPCS since the
company tries to offer multiple phone options for its consumers. If any of these suppliers decided
to pull from MetroPCS, it would take away from the variety of products they are trying to
provide. In addition, if any of the infrastructure components were to retract, it would put
consumers at an inconvenience.
In regards to buyer power, the main segment of MetroPCS would be those who low
income and those who do not like to use contracts. The contracts for MetroPCS range from $460,17 which is better than some of the contract phones seen in other companies that include data
plan fees. Based on the map in Appendix B, MetroPCS caters mainly to those who live in urban
areas. One of the disadvantages that MetroPCS has is that there is not as much coverage in

16

MetroPCS, "MetroPCS: Wireless for all: Phones." Last modified 2013. Accessed October 28, 2013.
http://www.metropcs.com/metro/PhonesandMore.
17
MetoPCS, "MetroPCS Phone Plans." Last modified 2013. Accessed October 28, 2013.
http://www.metropcs.com/metro/simpleplans.

Page | 20

comparison to Verizon, AT&T, and Sprint. If someone were to venture outside of the city, their
coverage would deplete substantially.
In regards to threat of substitution18, MetroPCS has to consider the fact that consumers
can use prepaid phones from other companies in order to get out of using a contract. This can
hinder competition if the rates of a prepaid phone are less of that than what MetroPCS has to
offer. One thing the MetroPCS has in this regard is that MetroPCS offers Smartphones whereas
most prepaid phones are usually a basic phone. (Refer to Appendix G for chart on Porters Five
Forces).

18

Mind Tools: Essential skills for an excellent career, "Porter's Five Forces." Last modified 2013. Accessed October
28, 2013. http://www.mindtools.com/pages/article/newTMC_08.htm.

Page | 21

Appendix A

Page | 22

MetroPCS Stock

AT&T Stock

Page | 23

Verizon Stock

Appendix B
Demographics: Boston.
Race/Ethnicity Composition (2010)[4]
Race/Ethnicity

Percentage

White

53.9%

Black or African American

24.4%

Native American

0.4%

Asian

8.9%

Native Hawaiian and Other Pacific Islander

0.0%

Two or more races

3.9%

Hispanic or Latino

17.5%

Non-Hispanic Whites

47.0%

http://en.wikipedia.org/wiki/Boston

Page | 24

APPENDIX B Cont.

Boston

MA

Population, 2012 estimate

636,479 6,646,144

Population, 2010 (April 1) estimates base

617,594 6,547,629

Population, percent change, April 1, 2010 to July 1,

2012

3.1%

1.5%

Population, 2010

617,594 6,547,629

Persons under 5 years, percent, 2010

5.2%

5.6%

Persons under 18 years, percent, 2010

16.8%

21.7%

Persons 65 years and over, percent, 2010

10.1%

13.8%

Female persons, percent, 2010

52.1%

51.6%

White alone, percent, 2010 (a)

53.9%

80.4%

Black or African American alone, percent, 2010 (a)

24.4%

6.6%

2010 (a)

0.4%

0.3%

Asian alone, percent, 2010 (a)

8.9%

5.3%

percent, 2010 (a)

0.0%

Two or More Races, percent, 2010

3.9%

2.6%

Hispanic or Latino, percent, 2010 (b)

17.5%

9.6%

American Indian and Alaska Native alone, percent,

Native Hawaiian and Other Pacific Islander alone,

Page | 25

White alone, not Hispanic or Latino, percent, 2010

47.0%

76.1%

2011

75.9%

86.5%

Foreign born persons, percent, 2007-2011

27.1%

14.7%

36.1%

21.4%

84.2%

88.9%

25+, 2007-2011

42.8%

38.7%

Veterans, 2007-2011

19,804

412,617

16+, 2007-2011

28.6

27.5

Housing units, 2010

272,481 2,808,254

Homeownership rate, 2007-2011

34.6%

63.6%

82.2%

41.8%

Living in same house 1 year & over, percent, 2007-

Language other than English spoken at home, percent

age 5+, 2007-2011
High school graduate or higher, percent of persons
age 25+, 2007-2011
Bachelor's degree or higher, percent of persons age

Mean travel time to work (minutes), workers age

Housing units in multi-unit structures, percent, 20072011

Median value of owner-occupied housing units,
2007-2011

$381,900 $343,500

Page | 26

Households, 2007-2011

247,621 2,522,409

Persons per household, 2007-2011

2.29

2.49

Per capita money income in the past 12 months (2011

dollars), 2007-2011

$33,158 $35,051

Median household income, 2007-2011

$51,739 $65,981

Persons below poverty level, percent, 2007-2011

21.4%

10.7%

http://quickfacts.census.gov/qfd/states/25/2507000.html

Appendix C
Net Additional

Total

Total Revenue (in

Customers

Customers

$millions)

1,021,800

3,962,786

$2,200

Verizon Wireless

2,000,000

65,700,000

$43,882

AT&T Wireless

9,100,000

70,100,000

$42,684

Sprint Nextel

566,000

54,000,000

$34,698

T-Mobile

3,644,000

28,700,000

$19,288

Alltel

961,255

12,785,193

$8,803

Leap Wireless

633,693

2,863,519

$1,631

MetroPCS
Communications

http://www.wikinvest.com/stock/MetroPCS_%28PCS%29

Page | 27

Appendix D

http://www.wikinvest.com/stock/MetroPCS_%28PCS%29

Page | 28

Appendix E
T-Mobile US, Inc.
Balance Sheet
Year e nding i n Dec. 31, 201x
Dollars i n thousands
Dec. 31, 2009 Dec. 31, 2010 Dec. 31, 2011 Dec. 31, 2012
CURRENT ASSETS:
Cash and cash e quivalents
$929,381
$796,531 $1,943,282 $2,368,302
Short-term i nvestments
224,932
374,862
299,972
244,990
Inventories
147,401
161,049
239,648
259,157
Accounts receivable
51,536
58,056
78,023
98,653
Prepaid e xpenses
48,353
50,477
55,712
65,069
Deferred charges
59,414
83,485
74,970
78,181
Deferred tax assets
1,948
6,290
7,214
3,493
Other current assets
28,426
63,135
44,772
69,458
Total current assets
1,491,391
797,354
2,743,593
3,187,303
Property and e quipment, net
3,252,213
3,659,445
4,017,999
4,292,061
Restricted cash and i nvestments
15,438
2,876
2,576
4,929
Long-term i nvestments
6,319
16,700
6,319
1,679
FCC l icenses
2,470,181
2,522,241
2,539,041
2,562,407
Other assets
150,475
123,433
173,403
141,036
Total long term assets
5,894,626
6,324,695
6,739,338
7,002,112
$ 7,386,017 $ 7,122,049 $ 9,482,931 $ 10,189,415
Total assets
CURRENT LIABILITIES:
Accounts payable and accrued e xpenses $ 558,366 $ 521,788 $ 512,346 $ 501,929
Current maturities of l ong-term debt
19,326
21,996
33,460
36,640
Deferred revenue
187,654
224,471
245,705
237,635
Other current l iabilities
32,123
34,165
25,212
71,599
Total current l iabilities
797,469
802,420
816,723
847,803
Long-term debt, net
3,625,949
3,757,287
4,711,021
4,724,112
Deferred tax l iabilities
512,306
643,058
817,106
1,031,374
Deferred rents
80,487
101,411
120,028
136,456
Other l ong-term l iabilities
81,664
72,828
90,453
90,763
Total long term liabilities
4,300,406
4,574,584
5,738,608
5,982,705
Total liabilities
5,097,875
5,377,004
6,555,331
6,830,508
19

19

Compiled values from sec.gov

Page | 29

STOCKHOLDERS' EQUITY:
Common stock
Additional paid-in capital
Retained e arnings
Accumulated other comprehensive l oss
Less treasury stock
Total stockholders' equity
Total liabilities and stockholders' equity

35
1,634,754
664,693

36
1,686,761
858,108

36
1,784,273
1,159,418

37
1,826,044
1,553,590

-11,340
0
2,288,142

-1,415
-1,914
2,541,576

-9,295
-6,832
2,927,600

-9,602
-11,162
3,358,907

$7,386,017

$7,918,580

$9,482,931 $10,189,415

Page | 30

Page | 31

T-Mobile US, Inc.

Statement of cash flows
Year e nding i n Dec. 31, 201x
Dollars i n thousands
Dec. 31, 2010 Dec. 31, 2011 Dec. 31, 2012
Net cash provided by operating
activities
Net cash used in investing activities
Net cash provided by (used in) financing
activities
Increase (decrease) in cash and cash
equivalents
Cash and cash equivalents, end of
period
Cash and cash equivalents, beginning of
period
Net decrease in cash and cash
equivalents

$ 994,500 $ 1,061,808 $ 1,181,451

-950,418
-886,871
-723,430
-176,932

971,814

-33,001

$ (132,850) $ 1,146,751 $ 425,020

$ 796,531 $ 1,943,282 $ 2,368,302
929,381

796,531

1,943,282

$ (132,850) $ 1,146,751 $ 425,020

Page | 32

Appendix F

Current Assets
Cash
Net Receivables
Inventories
Other Income Assets
Total Current Assets
Net Fixed Assets
Other Noncurrent Assets
Total Long Term Liabilities
Total Assets
Current Liabilities
Accounts Payable
Short Term Debt
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Other Noncurrent Liabilities
Total Long Term Liabilities
Total Liabilities
Stakeholder's Equity (mil)
Common Stock Equity
Total Equity
20 Total Liabilities & Equity

MetroPCS Communications, Inc.

Balance Sheet
Year e nding i n 201x
Dollars i n Thousands
2010
2011
$796.53
$1,943.28
58.056
78.023
161.049
239.648
578.249
482.64
1,593.89 2,743.59
3,659.45 4,018.00
2,665.25 2,721.34
6,324.70 6,739.34
7,918.58
$9,482.93

2012
$2,368.30
98.653
259.157
461.191
3,187.30
4,292.06
2,710.05
7,002.11
$10,189.42

$337.15
23.72
441.55
802.42
3,757.29
817.30
4,574.58
5,377.00

$318.08
51.49
478.23
847.80
4,724.11
1,258.59
5,982.71
6,830.51

$320.28
38.63
457.82
816.72
4,711.02
1,027.59
5,738.61
6,555.33

2,541.58 2,927.60 3,358.91

2,541.58 2,927.60 3,358.91
$7,918.58
$9,482.93
$10,189.42

20

Hoovers: A D&B Company, "MetroPCS Communications, Inc. Revenue and Financial Data." Last modified
2013. Accessed October 28, 2013. http://www.hoovers.com/company-information/cs/revenuefinancial.MetroPCS_Communications_Inc.66e87da5d795e210.html.

Page | 33

Revenue
Gross Profit
Operating Income
Net Income

MetroPCS Communications, Inc.

Income Statement
Year e nding i n 201x
Dollars i n millions
2010
2011
$4,069.35
$4,847.38
1,751.48
1,933.95
718.90
747.54
$193.42
$301.31

MetroPCS Communications, Inc.

Statement of Cashflows
Year Ending i n 201x
Dollars i n Millions
2010
Net Operating Cash
Net Investing Cash
Net Financing Cash
Net Change in Cash
Net Decrease in Cash and
Cash Equivalents
Cash at end of the year
Cash at the beginning of the
year
Net Decrease in Cash and
Cash Equivalents

2012
$5,101.28
2,171.23
823.97
$394.17

2011

2012

$994.50
(950.42)
(176.93)
(132.85)

$1,061.81
(886.87)
971.81
1,146.75

$1,181.45
(723.43)
(33.00)
425.02

($265.70)

$2,293.50

$850.04

796.53

1,943.28

2,368.30

929.38

796.53

1,943.28

$1,146.75

$425.02

-$132.85

Page | 34

21

Appendix G

21

Mind Tools, "Porter's Five Forces: Assessing the Balance of Power in a Business Situation." Last modified 2013.
Accessed October 27, 2013. http://www.mindtools.com/pages/article/newTMC_08.htm.

Page | 35

Page | 36