Shares of MetroPCS Communications, Inc. (NYSE:PCS) could see at least 40 percent upside over the next 12 months as the wireless carrier is on the brink of several catalysts, including its LTE roll-out, which is expected to boost growth in subscribers and average revenue per user (ARPU).
Meanwhile, the company's LTE pricing is generally 25-40 percent above its 3G offers. For example, its most compelling LTE plans are priced at $50 to $70 vs. $40 to $50 for its most popular 3G plans.
"Despite this improved plan mix, we are modeling only 2% growth in ARPU next year. This is arguably the most conservative metric in our model as only 8% of PCS's subs are currently on LTE plans," Deutsche Bank analyst Brett Feldman said.
Moreover, the company's most immediate strategic priority is gaining access to new spectrum, primarily to support its LTE network. The company currently has a paired 5x5 MHz AWS-1 spectrum configuration dedicated for LTE in most its markets and expects to offer LTE service to 97 percent of its footprint by the third quarter of 2012, up from 90 percent as of June.
It also expects to gradually re-farm its 1900 MHz spectrum bands as it transitions its CDMA subscribers to VoLTE starting late this year.