MetroPCS Communications Inc (NYSE:PCS) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Upgrade Expenses
Philip Cusick – JPMorgan: Let’s start with upgrades, can you give me an idea of — historically, upgrades have picked up pretty aggressively from 4Q to 1Q. Would you expect that to happen again this quarter and given how expensive each of the upgrades were, should we see that that mix start to come down a little bit as these 4G phones get a little less expensive or should we expect that per device subsidy to remain high?
Thomas C. Keys – President and COO: Phil, it was fully untrusting looking a little bit at the upgrade rate for the fourth quarter. It came in at 14% of the base compared to 13% of the base in the fourth quarter of 2011, so it was up slightly. Some of our initial estimates were higher from an upgrade standpoint. What was really interesting with the phenomena that we saw here was a rapid acceleration of upgrades throughout the fourth quarter. In December we saw an incredible amount of upgrades and we do accept that trend to continue into at least be at historical upgrade rates for the first quarter. You go back to our messaging earlier in the year, we always said that the 4G LTE For All initiative, the first wave of it would really be upgrades. The fourth quarter was extremely successful in that regard where we increased our LTE subscribers 117% to 26% of the base which was, as Roger said, a remarkable achievement; one of the fastest transitions of technology we believe in the history of wireless. We do expect that acceleration to continue into the first quarter. As Tom mentioned, over 75% of our upgrades were 4G LTE, and from a gross add standpoint over 57% of our mix was 4G LTE. On the subsidy related to 4G LTE handsets is higher than the CDMA handsets which really drove the balance of the increase in retention expense in CPU. Remember, we said it was 562 in the fourth quarter of ’12 versus 436 in the fourth quarter of ’11. We would expect that that differential would continue on into the first quarter. But all in all we’re very, very pleased with what we’re seeing. We’re rapidly migrating our base to a service that customers demand and as we mentioned we have a prepaid churn on 4G LTE that’s lower than some carrier’s postpaid churn. So, we’re very pleased with the momentum that we’re seeing.
Philip Cusick – JPMorgan: Then if I can so far in the first quarter we’ve heard from a number of people that tax rebate season was even more delayed than we’ve seen in the past, but it’s sort of now at a – the business is now at a full run rate, is that similar to what you’ve seen?
Thomas C. Keys – President and COO: Yes. I would say that probably two to three weeks late than last year. I think right now we’re in full swing. So, I think it’s consistent with what you’ve heard from everybody else, absolutely.
T-Mobile Closing
Michael McCormack – Nomura Securities: Maybe if you could just sort of lay out your thoughts as we approach the T-Mobile closing, obviously this year has been more of a focus on cash flow EBITDA, post-closing should we be thinking about rebalancing your priorities around subscriber and revenue growth versus profitability? Then just secondly, and I know this might be a stretch but it sounds like you got 8,000 LTE ads quarter to-date any chance if you can get any idea of how many of those are new to Metro?
J. Braxton Carter – Vice Chairman and CFO: So, I’ll take the first question the trajectory of the combined company I think is very, very exciting. You go back and you look at the guidance that has been put out, we’re looking for topline growth for NewCo over a five-year period at a 3% to 5% CAGR, and has been communicated multiple times, since the announcement of transaction, there’s multiple of components of that. The first component really being the stabilization of the postpaid part of the business, and with very significant enhancements to T-Mobile and NewCo, the Apple products, a very significant investment in network modernization and the un-carrier strategy that John Legere has talked about with the great amount of enthusiasm and we are all very, very excited about the prospects there, and we’re highly confident that the postpaid part of the business will stabilize during the year and we’ll be back into positive territory 2014 on. When we looked at the CAGR, we assumed very small growth in postpaid for years after 2013, very, very modest, and I think that’s just really a reflection of the overall saturation of the environment, and we think that there’s tremendous opportunity on the prepaid side of the business. T-Mobile has done an excellent job of positioning there prepaid platform during the year and you got to remember the net loss situation at MetroPCS was absolutely deliberate from a strategic standpoint. We saw no wisdom whatsoever in pursuing CDMA growth when we invested over $1 billion in the 4G LTE network and we knew where affordable 4G LTE handsets were coming. You can look at the churn differential relating to CDMA customers versus 4G LTE customers as a major part of that rush now and it certainly has proven the theory under which we executed during the year. Going forward there will be 4G products. So, absolutely we’re looking at a more aggressive growth coming out of the MetroPCS platform as well as the T-Mobile platform from a prepaid standpoint. We also have the opportunity to significantly expand the MetroPCS brand into other geographical locations in the U.S. leveraging existing T-Mobile infrastructure that’s already in place. So, without having to invest in incremental spectrum or incremental network, we’re looking at a highly accretive growth expansion strategy relating to the Metro brand. So, all-in-all we think that the growth story going forward for NewCo’s. can be very exciting and positions MetroPCS and T-Mobile in a much better place than either Company would be on a standalone basis.
Thomas C. Keys – President and COO: Touching on the second point, the mixture between upgrades and new grosses, we don’t break that out at this point in time. As we mentioned, it’s still relatively early in the tax season, but we have seen customers liking our new messaging campaign, We Have It, it’s a simplified approach. We certainly think that what we’ve done for the quarter to-date on LTE is really exciting. We have new handset devices, but I also want to point out that in changing our rate structure we’ve done away with our promotional rate plan of $30, which is important. We’re now on a $40, $50, $60 structure. So for everything we get either new customer or upgrade, it’s accretive to ARPU in the long-term.
Michael McCormack – Nomura Securities: Braxton, just a quick follow-up. When you guys closed T-Mobile, have you given any thought to how you plan to report, I guess is there any sort of new breakout on as Metro launches new markets or any breakout financially?
J. Braxton Carter – Vice Chairman and CFO: Yeah, I think we’re definitely going to have to quantify the impact of any expansion relating to the Metro model, because that will create some upfront investment that is certainly fully embedded in the guidance that we’ve given and in the CAGRs that we’ve given. But I think that’s just good disclosure.