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USA's Smaller Operators - MetroPCS and Leap Leading the Chasing Pack

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At the end of Q1 2008, the combined customer base of the six small US operators (Cincinnati Bell, Leap Wireless, MetroPCS, Ntelos, Qwest and US Cellular) was 15.53m, up from 13.66m a year earlier. This is equivalent to an annual growth rate of 13.6%. This is below the growth rates posted by T Mobile (18.4%) and AT&T (14.7%) for the 12 months ended 31st March 2008, although it is higher than the 10.6% recorded by Verizon and much better than the 0.6% Sprint Nextel reported yesterday.

However, it should be noted that there is significant disparity between the six small operators. The lion's share (84%) of the 1.86m net additions recorded in the 12 months to the end of Q1 08 were attributable to two operators, Leap Wireless and MetroPCS. They were also the only operators to post double digit growth rates, with Leap's customer base increasing 21.4% to 3.09m and MetroPCS seeing a 30.0% rise to 4.41m. Ntelos was the next best with a 9.9% uplift to its customer base, although it remained the smallest of the six with just 0.42m customers. Cincinnati Bell, the next smallest, managed 5.1% growth, finishing Q1 08 on 0.58m. The largest of the six - US Cellular - was up 3.8% year on year at 6.20m, while Qwest was the slowest growing, its Q1 08 total of 0.82m being only 0.5% higher than the Q1 07 figure.

A glance at the ARPU figures shows one of the reasons for the success of Leap and MetroPCS. Both have maintained low ARPUs, with only Cincinnati Bell recording lower. MetroPCS has been particularly consistent, keeping its blended quarterly ARPU figures between $42 and $44 per month for over three years. Its Q1 08 figure of $42.22 was the lowest since Q3 05. Meanwhile, Leap has kept its ARPUs at around $45 since the final quarter of 2006, with Q1 08's $44.98 a typical figure.

Clearly Leap and MetroPCS have made concerted efforts to keep prices low, and this has had the desired effect of robust growth to their customer bases. Most of the other operators seem to be trying to squeeze as much value as they can from their existing customers at the expense of raw customer growth, although Cincinnati Bell - with annual net additions of just 28.3k and ARPU of just $41.08 in Q1 08 - does not seem able to achieve either.


Market Share of Quarterly Net Additions

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