Metro PCS 2008 Annual Report Download - page 61

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Company Overview
Except as expressly stated, the financial condition and results of operations discussed throughout Management’s
Discussion and Analysis of Financial Condition and Results of Operations are those of MetroPCS Communications,
Inc. and its consolidated subsidiaries, including MetroPCS Wireless, Inc. and Royal Street Communications, LLC.
References to “MetroPCS,” “MetroPCS Communications,” “our Company,” “the Company,” “we,” “our,” “ours”
and “us” refer to MetroPCS Communications, Inc., a Delaware corporation, and its wholly-owned subsidiaries.
Unless otherwise indicated, all share numbers and per share prices give effect to a 3 for 1 stock split effected by
means of a stock dividend of two shares of common stock for each share of common stock issued and outstanding at
the close of business on March 14, 2007. On April 18, 2007, the registration statement for our initial public offering
became effective and our common stock began trading on the New York Stock Exchange under the symbol “PCS”
on April 19, 2007. We consummated our initial public offering of our common stock on April 24, 2007.
We are a wireless telecommunications carrier that currently offers wireless services primarily in the greater
Atlanta, Boston, Dallas/Ft. Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville,
Philadelphia, San Francisco, Sacramento and Tampa/Sarasota metropolitan areas. We launched service in the
greater Atlanta, Miami and Sacramento metropolitan areas in the first quarter of 2002; in San Francisco in
September 2002; in Tampa/Sarasota in October 2005; in Dallas/Ft. Worth in March 2006; in Detroit in April 2006;
in Orlando in November 2006; in Los Angeles in September 2007; in Las Vegas in March 2008; in Jacksonville in
April 2008; in Philadelphia in July 2008; and in New York and Boston in February 2009. In 2005, Royal Street
Communications, LLC, or Royal Street Communications, and with its wholly-owned subsidiaries, or collectively,
Royal Street, was granted licenses by the Federal Communications Commission, or FCC, in Los Angeles and
various metropolitan areas throughout northern Florida. We own 85% of the limited liability company member
interests in Royal Street Communications, but may only elect two of the five members of Royal Street
Communications’ management committee. We have a wholesale arrangement with Royal Street under which we
purchase up to 85% of the engineered capacity of Royal Street’s systems allowing us to sell our standard products
and services under the MetroPCS brand to the public. Royal Street has constructed, or is in the process of
constructing, its network infrastructure in its licensed metropolitan areas. We commenced commercial services in
Orlando and certain portions of northern Florida in November 2006 and in Los Angeles in September 2007 through
our arrangements with Royal Street. Additionally, upon Royal Street’s request, we have provided and will provide
financing to Royal Street under a loan agreement. As of December 31, 2008, the maximum amount that Royal
Street could borrow from us under the loan agreement was approximately $1.0 billion of which Royal Street had net
outstanding borrowings of $905.0 million through December 31, 2008. On February 17, 2009, we executed an
amendment to the loan agreement which increased the amount available to Royal Street under the loan agreement by
an additional $550.0 million. Royal Street has incurred an additional $14.2 million in net borrowings through
February 23, 2009.
As a result of the significant growth we have experienced since we launched operations, our results of operations
to date are not necessarily indicative of the results that can be expected in future periods. Moreover, we expect that
our number of customers will continue to increase, which will continue to contribute to increases in our revenues
and operating expenses. We currently plan to focus on building out networks to cover approximately 40 million of
total population during 2009-2010 including the launch of the Boston and New York metropolitan areas in February
2009.
We sell products and services to customers through our Company-owned retail stores as well as indirectly
through relationships with independent retailers. We offer service which allows our customers to place unlimited
local calls from within our local service area and to receive unlimited calls from any area while in our local service
area, under simple and affordable flat monthly rate service plans starting at $30 per month. For an additional $5 to
$20 per month, our customers may select a service plan that offers additional services, such as unlimited voicemail,
caller ID, call waiting, enhanced directory assistance, unlimited text messaging, mobile Internet browsing, push e-
mail, social networking services, location based services, mobile instant messaging, picture and multimedia
messaging and the ability to place unlimited long distance calls from within our local service calling area to any
number in the continental United States. We offer flat-rate monthly plans at $30, $35, $40, $45 and $50, as well as
Family Plans which offer discounts to our monthly plans for multiple lines. All of these plans require payment in
advance for one month of service. If no payment is made in advance for the following month of service, service is
suspended at the end of the month that was paid for by the customer and terminated if the customer does not pay
within thirty days. For additional fees, we also provide international long distance and international text messaging,