T-Mobile US, Inc.
Q4 2011 Earnings Call Transcript

Published: 23 Feb 2012

[Operator:]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the MetroPCS Communications Fourth Quarter and Year-End 2011 Conference Call. [Operator Instructions] This conference call is being recorded today, February 23, 2012. I would now like to turn the conference over to Mr. Keith Terreri, Vice President and Treasurer for MetroPCS. Please go ahead, sir.

[Keith D. Terreri:]

Thank you, Lisa, and good morning, everyone. Welcome to our fourth quarter and year-end 2011 conference call. The speakers with me this morning are Roger Linquist, our Chairman and Chief Executive Officer; Tom Keys, our President and Chief Operating Officer; and Braxton Carter, our Vice Chairman and Chief Financial Officer. The format for today's call is as follows

[Roger D. Linquist:]

Thank you, Keith. As we begin 2012, I'd like to address upfront, the key issues that are likely on most investors' mind

[Thomas C. Keys:]

Thank you, Roger. Good morning, everyone. I want to cover a few topics on today's call. Fourth quarter and year-end 2011 operational results provide an update on our network and discuss our opportunities for 2012 as the ecosystem for 4G LTE handsets develop. We exited 2011 reporting solid growth with 1.2 million net subscriber additions. We now serve over 9.3 million subscribers, up 15% from the end of 2010. Importantly, this growth is the result of continued positive annual growth in all of our markets, and is the sixth consecutive year in which we've reported full year net subscriber additions of over 1 million. We firmly believe that the no-contract space is viable, relevant and growing. There's a definite continued interest from consumers in no-contract plans that provide service, which have previously only been available to postpaid customers. In recent marketing studies we've conducted, we see subscriber growth coming from 4 main areas

[J. Braxton Carter:]

Thank you, Tom. Good morning. We ended the quarter with 197,000 net additions and ended the year with approximately 1.2 million net additions. We currently serve over 9.3 million total subscribers, an increase of 15% from the fourth quarter of 2010, and up 41% over the last 2 years. Our quarterly adjusted EBITDA was a record for the company at $362 million, up 15% when compared to the fourth quarter of 2010. For the year, our adjusted EBITDA was over $1.3 billion, also a record high for the company. Over the past 5 years, we have grown adjusted EBITDA to 15% CAGR, nearly doubling the amount from $667 million in 2007 to over $1.3 billion in 2011. We have a very strong balance sheet and substantial liquidity with $2.2 billion in cash and short-term investments at year-end. This liquidity positions us very well for future strategic opportunities, including spectrum acquisitions. We continue to evaluate various options to enhance our current spectrum holdings. We believe further investments in spectrum will significantly reduce future CapEx, will have a positive impact on free cash flows and will further leverage our 4G LTE investment. Our total leverage as of December 31, 2011 was 3.6x computed in accordance with the intentious governing of our senior notes. We believe our maturity schedule is very manageable, with our first substantial maturity of approximately $1 billion coming due in November 2016. Our weighted average cost of debt for the fourth quarter was approximately 6%. The majority of our debt is fixed by its nature or through interest rate swaps. Clearly, we believe we are very well-positioned from a balance sheet perspective. Churn for the quarter was 3.7%. The sequential 80 basis point decrease is primarily driven by normal seasonal effects related to traditional retail selling periods, as well as improved network performance resulting from the investment in our CDMA network to meet increased data demands. Our fourth quarter 2011 ARPU was $40.55, up $0.76 on a year-over-year basis. The increase in ARPU was primarily attributable to the continued demand for our Wireless for All and 4G LTE service plans, offset by an increase in family plan penetration from 32% of our customer base in 2010, to 45% of our customer base in 2011. Sequential decrease in fourth quarter ARPU was primarily due to the promotional activities during the quarter, as well as the seasonal timing of net additions in December. Our CPGA continues to be among the lowest of any facilities-based carrier in the U.S. For the fourth quarter, our CPGA was $166, up $4 over the fourth quarter of 2010. This increase is primarily driven by increased promotional activities. Our CPU for the quarter was $20 as compared to $18.83 in the prior year's fourth quarter. This year-over-year increase was primarily driven by the increase in retention expense on existing customers, costs associated with our 4G LTE network upgrade and roaming expenses associated with MetroUSA, offset by continued scaling of our business. Adjusted EBITDA for the fourth quarter was $362 million, an increase of 15% year-over-year. Our adjusted EBITDA margin for the quarter was 31.9%. For the year, we have recorded record adjusted EBITDA of $1.3 billion and our adjusted EBITDA margin of 30.1%. I'd now like to highlight a few items from the income statement, cash flow statement. In the fourth quarter, our service revenue and cost of service grew 17% and 21% respectively, to $1.1 billion and $384 million respectively, over the same quarter in 2010. The increases are primarily due to the growth of our subscriber base. We generated $308 million in cash from operating activities in the quarter, a decrease of $7 million from the prior year's fourth quarter. The decrease was primarily driven by a decrease in cash flows provided by changes in working capital. We incurred capital expenditures of $190 million during the fourth quarter. During the last 12 months, our unlevered free cash flow was $442 million. Our results demonstrate our continued focus and ability to grow the business while generating cash flows over the long term. Our current estimate for total 2012 capital expenditures is $900 million to $1 billion. We generated $91 million in consolidated net income during the fourth quarter or $0.25 per share. For the full year 2011, we generated $301 million in consolidated net income or $0.82 per share. Now we'll move to Q&A. Operator?

[Operator:]

[Operator Instructions] Our first question comes from John Hodulik with UBS.

[John C. Hodulik:]

Two quick things. I think the highlight of the quarter was that the strong margins you guys posted looks partially driven by lower-than-expected CPGA. And then Roger, in your prepared remarks, you said we'd see CPGA be reduced further. Is that -- are you talking sort of 2012 versus the numbers we saw in the fourth quarter? Could we see CPGA go down from what we saw this quarter and maybe what are the drivers of that? And then secondly, is there anything that you're seeing in the competitive environment that would suggest that we won't see the typical first quarter seasonality that we normally do?

[Roger D. Linquist:]

Let me take the first one. What I was referring to is that as we work with the handset vendors worldwide, what we are seeing is the interest in accelerating the change in technologies to 4G and that will reduce handset cost. We'll see the first reductions -- the first kind of wave in will be in the second half of this year. What I'm really saying, as it impacts CPGA, it's more of a 2013 event because even at a cost of, say, approximately $200, there will be a significant subsidy to get into the $99 price point. But I do believe firmly, that 2013 will be a year in which we can see substantial reductions in the LTE versions, and thereby, if that cost is reduced, then we think we have an opportunity to reduce our subsidies.

[Thomas C. Keys:]

John, I'll take that about competition, but I think I'll probably open up to the first quarter. First, competition, we have 2 things we have to do. We have to serve our core segment, continue to serve the best deal in town, value segment. And then we have to open up to new segments, we have to look to people who see us as a viable alternative to a 2-year commit, and we think we're going to be doing that by new handsets in the next 3 to 6 months. Handsets that will come in at 8 millimeters. They'll have 4 data screens, they will have 1.2 gigahertz dual-core processors. They will have batteries of 1900 milliamps or greater. So we think the handsets will be key for us to maintain our competitive edge. But I think the thing you're asking about into the first quarter isn't as much competition as how's the seasonality inside of the first quarter. So let me talk about tax season and what we see there. And maybe that'll hit a big topic for everybody. January, we think, was generally a little bit muted, and a lot of that was based upon return delays. There's a couple of things we found as we dug into it. Number one, we didn't see tax legislation firmed up until the end of December, so computers didn't get updated until the first couple of weeks of January. We've also seen problems with the IRS' program called Where's My Refund and that tool has had some issues for people to understand if their returns actually have been filed and accepted, and then we've seen a delay between 2 or 3 weeks. So January appeared a little bit muted. We do see February with typical seasonal trends which we enjoy. So the one part of the quarter that's too early to tell is, what does March look like yet and is there a longer tail on tax season based upon these delays? That we don't know yet, but we do understand that for us to meet competition -- we have 2 bases to serve and we have to have all the doors ready, we have to have inventory in the stores, we have to have a full set of promotions because we have to swing doors, not only to bring our existing customers back in the door to keep churn low, but we have to find new recruits to come in the door and the first quarter is usually the opportune time to do that.

[J. Braxton Carter:]

John, let me add a couple of things to that color. Last year, we also saw the first quarter develop later during the year. The changes that the IRS did with refund anticipation loans and the pre-approval of that caused a significant lag. And I'm sure that a lot of people in this call have heard about the additional fraud preventions that are being put in that are causing an additional delay this year. So this is really the latest we've seen refunds hitting in our operating history. But it does appear that the refunds are picking up, and that is one of the key drivers to our first quarter. But again, we saw some of the same trends last year. And specifically, you asked about CPGA on this quarter, I think Roger definitely positioned what the expectations are from the future. From looking at the type of promotion that we have in first quarter, which is very different from our fourth quarter promotion. Remember, in the fourth quarter, we really had a family plan-oriented promotion, and that was the key driver for the pressure that we saw sequentially in ARPU. That is not the promotion for the first quarter of 2012. We expect to see again, continued drive to our higher-end rate plans, and not that ARPU pressure that we saw growing from last year. Our promotions for the first quarter really shifted back to handset-driven promotions. And I think the expectation is that while you have record low CPGA in the fourth quarter, CPGA for year-over-year actually will increase, probably in the 10% range for the first quarter of 2012. And one final thing there, the 10%, it depends a lot upon what ultimate volume is. Because a key driver on CPGA is the total amount of growth is to cover your front costs. Remember, all of our store expenses, all of our fixed costs are embedded in CPGA. So if you have more volume, that will somewhat mute the CPGA increase. If you end up having lower volume, that will accentuate the CPGA increase.

[Operator:]

We'll take our next question from Jonathan Chaplin with Crédit Suisse.

[Jonathan Chaplin:]

So just one quick follow-up question on normal seasonal trends. Should we expect the same magnitude of reduction of churn sequentially going from 4Q into 1Q, given the investments you've made in the network that should continue to benefit your normal seasonality? I think it's normally been around 50 basis points.

[J. Braxton Carter:]

Yes.

[Jonathan Chaplin:]

Great. And then wondering if you can give us a little bit more color on sort of where you see opportunities on the spectrum front. It's -- the amount of spectrum that could potentially be available to you guys has sort of gotten a lot more cloudy over the course of the last couple of months. I'm wondering if you can sort of go through what the opportunities are and how you compare them against each other and where your preferences are?

[J. Braxton Carter:]

Jonathan, that's a great question, and there's no question that there have been a lot of developments. The whole LightSquared situation, we've been watching very, very closely, the whole Comcast-Verizon deal that took out some very, very positive and very favorable spectrum out of the marketplace. The T-Mobile-AT&T deal, we really believe that, that could have been an opportunity for our company. But that doesn't mean that there's not a lot of other options out there. And you've seen lately, a lot more governmental action. We believe that there's potential that some of that could accelerate, the problem is, is that’s several years out. And we're looking at all the natural suspects that you talked about in a lot of the things that you write. And we continue to really work all options. This is important to us. We believe that our CapEx is elevated right now, which is pressuring free cash flows. Even with that, we did almost a $0.5 billion of unlevered free cash flow in the last year, but the potential is much, much more with adequate spectrum. So it's something that we're very focused on as a company.

[John C. Hodulik:]

I think the beginning of last year, before the network got strained, we were looking at sort of CapEx for the business in the $700 million to $800 million range. Is that the right range to think about where CapEx could come down to once you have more spectrum?

[J. Braxton Carter:]

Directionally, absolutely.

[Operator:]

Our next question comes from Simon Flannery with Morgan Stanley.

[Simon Flannery:]

Braxton, on the gross adds in Q4, we saw a year-over-year increase, but it was down sequentially. I just wondered if you could just comment on what was driving that and how is the gross adds? I guess you sort of already touched on Q1, but should we see sort of normal seasonal trends again in Q1 on that? And then, Tom, on the network performance, can you just talk a little bit more about what you're seeing, you'd put in CDMA? I think it was 20% or so of your sites. Is that pretty much where you need to be or is that something where you'll continue augmenting through 2012?

[Thomas C. Keys:]

Thanks, Simon. Yes, 20% of our sites [indiscernible] are carriers. It's a little bit of a moving target, right? Because we worry about hotspots, we know where we have hotspots, i.e. more customers at a cell site, on a sector, based upon our feature phones, just on history. So to prepare for that, we look at those same hotspots if we see additional customers and/or people upgrading to an Android phone from a feature phone. So we don't think it's going to be dramatic in terms of adding additional carriers. But there will be cell sites that on an as needed basis during 2012, that will make sense to convert a carrier over to a deal carrier, just to give that area high-quality so we prevent any blocking and any drops on that particular site. Braxton, you want to talk about the gross adds?

[J. Braxton Carter:]

We all defer to you on that, Tom.

[Thomas C. Keys:]

Got you. Okay, I'll take the gross adds as well, Simon. So part of the promotion that we had in the fourth quarter was really voice-centric, so we look at the fourth quarter as a feature phone promotional time where we would get more family members, i.e. younger people into their first phone, adding for a Christmas present, holiday present. And that's why we really went to the 4 for $100 promotion, and we probably had a lower CPGA because feature phones obviously come with a lower cost. So when Braxton was alluding to a little bit of the CPGA bump in the first quarter, part of that's going to come from a higher-priced handset, which is going to be an Android handset. We do think that the seasonal trends inside the gross adds will continue, but as we talked about, right now, we're in the middle of the first quarter, but we also saw a more muted January. So to everybody's point, we have to look to the tax season to continue. And then with that, we think we'll find ourself in that right seasonal realm. But still early to call the quarter for gross adds.

[Operator:]

Our next question comes from Rick Prentiss with Raymond James.

[Richard Prentiss:]

First question, to piggyback on Simon's there, it was definitely interesting as now we've gotten T-Mobile report, as well as yourself. It felt like there had been a shift back away from prepaid to postpaid in fourth quarter, what's typically a seasonally strong period for prepaid and I'm just wondering, did the iPhone launch have any impact all the way downstream into prepaid, or are we seeing people flocking back to postpaid for some reason? It just seems like the industry trend in the U.S. was a little bit away from prepaid back to postpaid?

[Thomas C. Keys:]

Rick, I would say flocking is an interesting term. Anytime you have a brand new entrant, right? With the iPhone being introduced by the first third postpaid carrier and with the amount of promotion that they put towards doing that, yes, it probably took some momentum away. It took a lot of people's focus away from what they might have looked at over to the iPhone. I think that's natural as an initial launch. I think we'll see some leveling of that and then we'll find demand shift probably in the first quarter to the second quarter, as that normalizes for them.

[Richard Prentiss:]

Okay. And then on the LTE, you mentioned you're expecting some lower handset prices in the second half. Can you talk a little bit about the lineup, the prices and when do you expect Voice over LTE to be fully embraced?

[Thomas C. Keys:]

First, I'll take the introduction of the handsets and I'll let Roger touch on VoLTE. We think the second half of the year, obviously, we'd love it to be closer to the middle than the back half. But we think that the roadmap is clearly second half, call it third quarter to the fourth, if not a little bit sooner. We have about 6 carriers right now, working on what we would call our LFA products, right? There are LTE for All products, we consider those to have lower cost, fully featured, but lower cost. And we're working with all of our OEMs to get there. I just came back from a trip a week ago, spent a week over in Asia. We do that about you 3 times a year, and we're starting to see tremendous movement. Not by everybody, for those who are listening, but for the ones who are moving really quickly, we think we're going to find a couple of devices that will be really attractive, have very good economics for Metro, and then be able to get down to the price points that Roger mentioned. Do I think we'd get down to the $99 on day one, I don't know. It's all about which provider comes in. But we've been explicitly clear with everybody on our volume demands, on what we need out of the handset, about what we think it can do to our existing base, as well as new entrants and the branding campaign to kind of piggyback this. The Everyone's Moving in Metro was designed specifically to have a 6-month branding runway. So that when we move to this LTE for All process, everybody knows who we are. And at that point in time, our contracted base that's out there, as they come into their contract renewal season and we get ready for fourth quarter 2012, we think we're going to be well-positioned with our name being known, known to a brand-new segment, people that have choice but are looking for speed and a fully functioning handset. So prices between $149 and $99 retail, I absolutely think we'll be there. I'll turn it over to Roger on the VoLTE front.

[Roger D. Linquist:]

Yes, VoLTE is -- we will have at least 1 if not 2 handsets with VoLTE in the second half. As many of you know, this is a new development again. So being at the bleeding edge twice with LTE and then with VoLTE, VoLTE obviously is very important to us. If we're going to reform spectrum, you've got to have both voice and data on your LTE network. It's down to chipsets and many of you know that the 8960 chipset, which is kind of the building block for most of the vendors and device level handsets, are determined by that chipset and it is not fully baked. There is a more fully baked version in wideband CDMA. So it's probably a 2013 reality. But we will have at least 1, if not 2, handsets that will be completely VoLTE-capable. And our initial test on it has been very attractive from raw scores. So we see it as a attractive and we're ready to move when the industry is ready.

[Thomas C. Keys:]

Roger, if I can add, one of the things we've done to deleverage our risk and our dependency on just one worldwide chipset, is 2 of our OEMs are working on individual roadmaps for their own chipset for LTE utilizing VoLTE. So we think having 3 opportunities really de-risks what we're trying to go here.

[Richard Prentiss:]

Any demand from your sub-base for tablets?

[Thomas C. Keys:]

Interesting. If it's a Wi-Fi-only, it’s a really high-priced accessory for MetroPCS. And if it's on the LTE network, then it's probably really interesting for us. So I don't think our sub-base has cried for tablets. I think they're also trying to figure out what is a tablet? Is it 7 inches, is it 10.1? Should it be Wi-Fi-only or should it have the carrier's monthly MRCC on it? So we don't know exactly where that fits on our base yet. But we're looking at everything, we've had offers for multiple OEMs to carry products, but we've held off as of right now.

[Richard Prentiss:]

Probably not a '12, but a '13 look, maybe?

[Thomas C. Keys:]

That's probably the right time.

[Operator:]

Our next question comes from Michael Rollins with Citi.

[Michael Rollins:]

If I go back to Slide 8, in the supplementals that you provided, you discussed the 54% replacement rate for 2011. If I were to add that to the churn, which I think was roughly 46% for the year, I'm just annualizing the average churn, there's roughly 100% turnover in the devices. And I know it's not person per person but it's just sort of the rough math. And I just wanted to get your latest perspective as to why you think the velocity of devices moves so quickly through your base, which tends to be more of a value-conscious base, and then how you look at the opportunity to improve the totality of that number and what it could mean for margins on a 2 to 3-year view for the company?

[Thomas C. Keys:]

That's a great question, Michael. The first thing is you're asking me to give up a little bit of the secret sauce, so I'll be happy to do that. We see people 12 times a year. So as we introduce new handsets and they come in to our store a member, pay by the month, they come in, 68% of the base pays in cash. As they come in to our dealers and our dealers carry a full line of equipment, they see when we launch new products. The one thing we know from our base is that handsets are fashion, handsets are function. People have a personality attached to a handset and there's an absolute desire to do more because our handsets have a 4 for 1 utility, right? Its mobile voice, fixed voice in the home, and that's the same thing with broadband, right? It's mobile broadband, fixed broadband in the home, because a lot of our customers use our phone only for the only-Internet connection. So that 100% is a good number but we actually benefit by that because it keeps reaffirming their belief in MetroPCS, which does help churn. Secondarily, it helps us sell more phones because a lot of people come into the store to make payments with somebody else who's not presently a customer. That works on the viral nature of how we advertise, at how we move a product, keeps our CPGA lower. It keeps our net promoter score higher. So those are good things we think. We also have seen in the last 60 days, a very nice increase to LTE. We're seeing customers who want speed because they want to do more, I think every report you'll read is about increased data usage, which we're all mindful of. But that also means that what we're building, as Roger alluded to, this bridge that we've talked about getting to LTE for All, we are confident that it's the right path to be on.

[J. Braxton Carter:]

Mike, I think you point out something very astutely. When you look at Slide 8, you see a significant elevation from 2009 to 2010 and 2011. And what happened in 2010 is, remember, we've launched the Wireless for All, but we did away with the first month free and did a corresponding reduction in our handset prices. So we felt that there was a lot of pent-up demand from a run rate of about 30% of the base in the '09 and into '10. What changed at the end of '10 was the launch of the Android and the real proliferation of smartphones in the marketplace. And we've seen very rapid uptake of the smartphone this year and a very rapid uptake of our base upgrading to it. And that's why you got earlier in 2011, even a more significant bump in our upgrade rates. That did somewhat moderate in the fourth quarter. And we believe it could continue to moderate and be helpful from a margin standpoint going forward, as people really have embraced the smartphone and most of our bases there. So I think that you bring up a great point there.

[Operator:]

We'll take our next question from Phil Cusick with JPMorgan.

[Philip Cusick:]

So 2 questions that sort of go together. Can you help us out with the timing of CapEx through the year, whether the sort of acceleration that needs to happen from a fairly low 4Q level? And then as you think about the cost of service on the network, it was pretty stable from 3Q to 4Q for the first time in about a year. How do you expect the business to sort of scale from here versus the any further increase in that cost of service line over the next year as you sort of expand the network?

[J. Braxton Carter:]

Sure. So one of the key things that we're doing during 2012 is we're building out all of our footprint with 4G LTE. And we're really focused on doing that as soon as possible during the year. So if we were going to weigh CapEx, I would weigh more of the CapEx to the first half of the year versus the second half of the year. From a cost of service standpoint, we will continue to put in backhaul, we have a major market wave backhaul initiative in place that Roger will touch base on -- here in a second, which we think will be very positive and very cost efficient in the future. But we are going to continue to add network expenses to our business as we continue to build out the 4G LTE footprint. We've talked about upgrades, we're hoping to see some moderation of that but probably not a significant moderation as we continue to benefit -- penetrate the base in smartphones during 2012. And those factors would be offset by some additional scale in our business. So when you put all this together, what does it really mean from a margin standpoint? We don't think that there's a catalyst to really significantly increase margins in 2012. But given our view of the business and the discipline and our continued focus on cost, nor do we see a significant catalyst to decrease margins. This continues to be a year of transition. You've heard Roger and Tom spend a lot of time talking about 4G LTE developing in the latter half of the year, where we can start putting scale on that network. We really expect to see the margin expansion occur in 2013. Roger, do you want to talk a little bit about the market wave?

[Roger D. Linquist:]

Yes, sure. Let me introduce that though, because I think it's quite important. We see that the forward link in many cases, from our own system's standpoint is in some instances, limited by the backhaul. That’s not a new concept, it’s something that's industry-wide, so that in order to create the kind of experience that we want, which is a high throughput, very low latency-type service, which by the way, as reflected itself even in a fairly high-priced handset on the $300 range, with LG, has caused fairly significant increase in early this year for LG's -- excuse me, for LTE service. So with a single handset that's in the $350 range, we see a very strong demand for that product, unusually strong. I think signaling the fact that people see that this service is really very attractive and no one can discount the latency because that's how quickly a screen pops up after one is launched and requested. So to do this, we have committed to first purchase microwave spectrum in all of our markets that would allow us, in the 100 to 200 megahertz range, to accomplish backhaul that we think would be necessary going into later 2012, particularly 2013. And that microwave backhaul will be foundational because we'll all, in the industry, want to densify our network. And there is no really better way to do it other than a well-designed, let me call it a mesh network. And I mean by that, is that we do not have to coordinate individual links. We bought the microwave spectrum in the entire market, as I mentioned, 100 to 200 megahertz. So we have adequate bandwidth and/or picocells or microcells that one would want to drop in, even data cells for that matter, could be located in hotspots to give the kind of support for the data traffic that we expect in our major markets. So we see this as foundational for growing the system, densify the network, because the LTE capacity based on our model will be one that we'll want to continue to expand. And we can do it no better way than to access what's the most difficult thing to get, which is backhaul, once you put it in the site. Ours is always available, backhaul isn't.

[Operator:]

And we have time for one additional question. We'll take that question from Jason Armstrong with Goldman Sachs.

[Matthew Niknam:]

It's actually Matt Niknam on for Jason. Just a question on ARPU. I'm just wondering if you're comfortable that the smartphone penetration gains will sustain the ARPU growth trajectory you saw through 2011, or if you're expecting any sort of macro headwinds or competition to moderate this in 2012 .

[J. Braxton Carter:]

I think that the one thing that could moderate ARPU growth during 2012 would be increased focus on family plans. There's a balance there. When we do family plan promotions, you definitely are optimizing the CPGA, but you are somewhat sitting onto your natural accretion of ARPU during that time period. But there's another benefit, and that is we do see a fairly significant difference in retention characteristics for family plan customers versus nonfamily plans. So while that is not our promotion in the first quarter, it is very possible that, that will happen during the year, and would somewhat mitigate some of the natural growth that you would otherwise expect.

[Roger D. Linquist:]

I think that the key from our standpoint is that moving into LTE gives us an opportunity to support and shall we say, increase ARPU in a reasonable but important way, because we find that most of our customers or at least half of them, seek unlimited service, which is for us, a $60 plan and the other being a $50 plan. So I think that for us, the movement to LTE is the opportunity to strengthen ARPU because at that rate and with that plan, we are so much more competitive than anyone else. And note that the spread increased by $10 there, iPhone plan to get to unlimited service. And this is going to be a key factor in our thinking going forward. But it's really our target, which we've aimed at now for 3 years, to provide this very high performance service and we expect to get paid for it.

[J. Braxton Carter:]

Thank you again, for participating on today's call. We appreciate your interest and support of MetroPCS, and we look forward to our next quarter of continued progress. Operator?

[Operator:]

Ladies and gentlemen, this concludes the MetroPCS Communications Fourth Quarter and Year-End 2011 Conference Call. Thank you for your participation. You may now disconnect and have a pleasant day.