(PCS) MetroPCS Communications Rolls out Smart Plan

Stiff competition among telecom operators has forced MetroPCS Communications Inc. (PCS) – one of the leading prepaid operators in the U.S. market – to offer attractive 4G LTE service plans to low-end customers.

The new plan – costing its customers just $55 a month – is offering unlimited talk, text and 4G LTE data services. Moreover, up to three family members of that individual can get the same service for only $50 a month.

MetroPCS will offer this attractive service through its latest 4G-based LG Motion handsets costing only $149 (excluding tax). The new LG smartphone will be available to the online customers and any MetroPCS store. The new handset is also powered with Android 4.0 and supports 5 MP camera with 1080p video recordings. Moreover, the LG smartphone is integrated with 1.2 Ghz processors, which will provide smooth multi-tasking facilities.

Higher proliferation of smartphones and tablets has increased the demand for data usage. So in order to withstand such pressure arising out of the huge demand for data, most telecom players like Verizon Communication Inc. (VZ) and AT&T Inc. (T) have introduced data plans that limit the speed of data usage after a certain point.

Therefore, we believe that the introduction of unlimited 4G LTE data service will not only help MetroPCS to combat competition but also help the company to gain market share. However, T-Mobile also plans to launch unlimited data service plan to its post-paid subscribers at attractive rates, which we believe may result in a new set of competition among telecom players.

We maintain our long-term Neutral recommendation on MetroPCS. Currently, MetroPCS retains a Zacks #2 Rank, implying a short-term Buy rating on the stock.

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