Metro PCS 2010 Annual Report Download - page 74

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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., or Wireless. 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.
We are a wireless telecommunications carrier that currently offers wireless broadband mobile services primarily
in selected major metropolitan areas in the United States, including the Atlanta, Boston, Dallas/Fort Worth, Detroit,
Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco and
Tampa/Sarasota metropolitan areas. In September 2010, we introduced the first commercial 4G LTE service in our
Las Vegas and Dallas/Fort Worth metropolitan areas. Subsequently in 2010, we launched our 4G LTE service in
our Detroit, Los Angeles, Philadelphia, Boston, New York, San Francisco and Sacramento metropolitan areas. We
further expanded our 4G LTE services into Atlanta, Jacksonville, Miami and Orlando metropolitan areas in January
of 2011. 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. From 2005 through 2010, Royal
Street constructed networks with our assistance in its licensed service areas and, pursuant to agreements with us that
were reviewed and approved by the FCC, sold us services on its network on a wholesale basis which we in turn
marketed on a retail basis under the MetroPCS® brand to our customers. In December 2010, we consummated the
purchase of the remaining 15% interest in Royal Street Communications with the consent of the FCC, resulting in
Royal Street Communications and its wholly-owned subsidiaries becoming wholly-owned subsidiaries of the
Company.
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 sell products and services to customers through our Company-owned retail stores as well as indirectly
through relationships with independent retailers. Our service 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 service area, for a flat-
rate monthly service fee. In January 2010, we introduced a new family of service plans, which include all applicable
taxes and regulatory fees and offering nationwide voice, text and web services on an unlimited basis beginning at
$40 per month. For an additional $5 to $20 per month, our customers may select alternative service plans that offer
additional features on an unlimited basis. On November 4, 2010, we introduced Metro USASM which allows our
customers to receive services in an area covering over 280 million population for the same rates as we previously
charged to use our voice, text messaging and web browsing services through a combination of our own networks
and roaming arrangements with third parties. In January 2011, we introduced new 4G LTE service plans, which
include all applicable taxes and regulatory fees, that allow subscribers to enjoy voice, text and web access services at
fixed monthly rates starting as low as $40 per month. 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, if the customer does not pay within 30 days, the customer is
terminated. Our service plans differentiate us from the more complex plans and long-term contract requirements of
traditional wireless carriers.
Critical Accounting Policies and Estimates
The following discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States of America, or GAAP. You should read this discussion and analysis in conjunction
with our consolidated financial statements and the related notes thereto contained elsewhere in this report. The
preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that
affect the reported amounts of certain assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities at the date of the financial statements. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under the circumstances, the results of which form the