Metro PCS 2011 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. As of December 31, 2011, we hold licenses for wireless spectrum suitable for wireless broadband mobile
services covering a total population of 142 million people in and around many of the largest metropolitan areas in the United
States. In addition, we have roaming agreements with other wireless broadband mobile carriers that allow us to offer our
customers service in many areas when they are outside our service area. These roaming agreements, together with the area we
serve with our own networks, allows our customers to receive service in an area covering over 280 million in total population
under the Metro USA® brand. We provide our services using code division multiple access, or CDMA, networks using 1xRTT
technology and evolved data only, or EVDO, and, fourth generation, or 4G, long term evolution, or 4G LTE, technology. We
introduced the first commercial 4G LTE service in the United States in our Las Vegas and Dallas/Fort Worth metropolitan areas
in September 2010 and at that time launched the world's first dual mode 4G LTE/CDMA handset. Subsequently through the
remainder of 2010 and early 2011, we launched our 4G LTE service in the remainder of our major metropolitan areas. 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 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. 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 access services on an unlimited, no long-term contract, paid-in-advance, flat-rate 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. We also offer discounts to customers who purchase services for additional
handsets on the same account. In January 2011, we introduced new 4G LTE service plans that allow customers to enjoy voice,
text and web access services at fixed monthly rates starting as low as $40 per month. For additional usage fees, we also provide
certain other value-added services. 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 basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different