Metro PCS 2009 Annual Report Download - page 83

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71
Service Revenues. Service revenues increased $693.1 million, or 28%, to $3.1 billion for the year ended
December 31, 2009 from $2.4 billion for the year ended December 31, 2008. The increase is due to increases in
Core Markets and Northeast Markets service revenues as follows:
•Core Markets. Core Markets service revenues increased $470.2 million, or 19%, to approximately $2.9
billion for the year ended December 31, 2009 from $2.4 billion for the year ended December 31, 2008. The
increase in service revenues is primarily attributable to net customer additions of approximately 598
thousand customers for the year ended December 31, 2009, which accounted for approximately $497.1
million of the Core Markets increase. Offsetting these revenues, in accordance with ASC 605, is $26.9
million that would have been recognized as Core Markets service revenues but was classified as equipment
revenues because the consideration received from customers was less than the fair value of promotionally
priced handsets.
•Northeast Markets. Northeast Markets service revenues increased $222.9 million to $235.3 million for the
year ended December 31, 2009 from approximately $12.4 million for the year ended December 31, 2008.
The increase in service revenues is primarily attributable to net customer additions of approximately 675
thousand customers for the year ended December 31, 2009, which accounted for $238.9 million of the
Northeast Markets increase. Offsetting these revenues, in accordance with ASC 605 is approximately $16.0
million that would have been recognized as Northeast Markets service revenues but was classified as
equipment revenues because the consideration received from customers was less than the fair value of
promotionally priced handsets.
Equipment Revenues. Equipment revenues increased $35.8 million, or 11%, to $350.1 million for the year ended
December 31, 2009 from approximately $314.3 million for the year ended December 31, 2008. The increase is due
primarily to an increase in Northeast Markets equipment revenues, partially offset by a decrease in Core Markets
equipment revenues:
•Core Markets. Core Markets equipment revenues decreased approximately $9.8 million, or 3%, to $300.7
million for the year ended December 31, 2009 from $310.5 million for the year ended December 31, 2008.
The decrease in equipment revenues is primarily attributable to a lower average price of handsets activated
reducing equipment revenues by approximately $61.3 million, partially offset by an increase in gross
additions and an increase in upgrade handset sales to existing customers accounting for an approximate $26.3
million increase in equipment revenues. In addition, in accordance with ASC 605, $26.9 million that would
have been recognized as Core Markets service revenues was classified as equipment revenues because the
consideration received from customers was less than the fair value of promotionally priced handsets.
•Northeast Markets. Northeast Markets equipment revenues increased approximately $45.6 million to
approximately $49.4 million for the year ended December 31, 2009 from $3.8 million for the year ended
December 31, 2008. These equipment revenues are primarily attributable to the growth in the Philadelphia
metropolitan area as well as the launch of service in the New York and Boston metropolitan areas in early
2009. In addition, in accordance with ASC 605, approximately $16.0 million that would have been
recognized as Northeast Markets service revenues was classified as equipment revenues because the
consideration received from customers was less than the fair value of promotionally priced handsets.
Cost of Service. Cost of service increased approximately $262.8 million, or approximately 31%, to $1.1 billion
for the year ended December 31, 2009 from approximately $857.3 million for the year ended December 31, 2008.
The increase is due to increases in Core Markets and Northeast Markets cost of service as follows:
•Core Markets. Core Markets cost of service increased approximately $125.3 million, or approximately 16%,
to approximately $910.9 million for the year ended December 31, 2009 from approximately $785.6 million
for the year ended December 31, 2008. The increase in cost of service is primarily attributable to the growth
in our Core Markets customer base, the deployment of additional network infrastructure during the year
ended December 31, 2009 and costs associated with our unlimited international calling product.