What to Make of MetroPCS's Q3 Subscribers Numbers?

On October 6, MetroPCS (PCS) pre-announced strong Q3 subscriber numbers. Here are the highlights:

Positives

1. On a gross basis, the company added 935,000 subscribers, a 39% year-over-year increase.
2. On a net basis, the company added 249,265 subscribers, a 118% year-over-year increase.
3. Churn decreased 0.4% year-over-year to 4.8%, but increased on a quarterly basis (along with seasonal trends) by 0.3%.
4. On a net basis, Expansion Market subscribers grew by 12.3% quarterly, or 218,886.

Negatives

1. On a net basis, Core Market subscribers grew by 1.1% quarterly, or 30,379.
2. No information on the uptake of Houdini.

My read on the positive, albeit mixed report is that my original thesis (found here) is playing out as expected, with some caveats.

The company is offering a product that resonates with the current urban consumer. It is cheap, does not require a long-term commitment, does not require a credit check, and is crucial to interacting with others in a “normal” fashion. This is most obvious in Expansion Markets, where the supermajority of growth has been achieved in the past two quarters. I attribute this primarily to the size and under-penetration of the Expansion Markets and the aggressive marketing campaigns that are capturing the “low-hanging fruit” there. However, Core Market growth continues to disappoint, which is a red flag, because it demonstrates the limits of PCS’s ability to penetrate a given market. This will become an increasingly important factor if the company cannot recalibrate expenses (particularly sales & marketing) to fit with the remaining potential in mature markets.

For now, the company has a large and resilient growth engine in the Expansion Markets, and a future cash machine in the Core Markets, so it is not only a safe bet with limited downside in this economic environment, but one that potentially has significant upside even in the face of an ever-declining Nasdaq. My thesis, time horizon, and price target all remain unchanged, with a bias towards moving higher.