How Does MetroPCS Compare With the Wireless Titans?

MetroPCS (PCS) is going public this week. I like its business model focusing on 'under-served markets' in large Metro areas with an unlimited minutes package and no contractual obligations.

There is bound to be a lot of growth in this niche and MetroPCS are looking well positioned.

A fast look at some fundamental business metrics vs the giant Cingular/AT&T (T) and Verizon (VZ) compares well: (thanks to Keith McMahon for Cingular/VZW data)

Churn is a little high (and I guess expected given the no-contract model) and with user acquisition costs of $120 it's taking over a year to break even on a new customer.

However, average user revenue is comparable to Cingular and Verizon and margins are healthy showing that allowing unlimited calling for your customers doesn't cost all that much.

Growth is a major bright spot, and this company is only getting started!

The main competitive pressure is MVNO's (Mobile Virtual Network Operators sitting on Verizon's network) moving in with similar business models but less fixed costs. But the lower bound of an MVNO's price structure is determined by the deal they can make with Verizon and this will limit how competitive they can be.