Wireless Madness at Sprint, MetroPCS

Over the last three months the best performing wireless carrier stock has been — wait for it — Sprint Nextel Corp. (NYSE: S), up nearly 62%. The second best performing stock in the same period is MetroPCS Communications Inc. (NYSE: PCS), up more than 16%. AT&T Inc. (NYSE: T) is up 11% in the three-month span, as is Verizon Communications Inc. (NYSE: VZ), joint owner with Vodafone Group plc (NASDAQ: VOD) of Verizon Wireless. Only Leap Wireless International, down nearly -10%, and Deutsche Telekom AG (OTC: DTEGY), owner of T-Mobile USA), down less than -1%, have failed to join the party.

Both MetroPCS and Sprint reported second-quarter earnings today, and by the usual measures of performance, neither produced particularly stunning results. MetroPCS posted EPS of $0.41 on revenue of $1.16 billion, both higher than a year ago. The consensus estimate called for EPS of $0.21 on revenue of $1.26 billion.

Sprint posted an EPS loss of -$0.46, compared with an EPS loss of -$-0.28 in the same period a year ago, and a consensus estimate for a loss of -$0.41 in the second quarter. Sprint’s revenue, though, busted it: $8.84 billion versus an estimate of $8.72 billion and 6% higher than last year’s second-quarter revenue.

MetroPCS plans to launch its complete 4G LTE network by the end of this quarter and further expects that the combination of the faster network and the company’s no-contract, pre-paid service will boost subscriber numbers. The company’s churn rate is down and its subscriber losses are also down, leading the company to affirm its previous guidance. One caution has to be that MetroPCS’s customers typically earn lower incomes and are quicker to drop service in tough economic times. If the US economy picks up, however, more subscribers could get on-board.

At Sprint, the company continues to dismantle the walkie-talkie network it acquired with Nextel, which will free up that spectrum for faster data service. Sprint continued to sell Apple’s iPhones at the same pace as in the first quarter, pushing 1.5 million units out the door. The company is the only one of the four large carriers still to offer an unlimited data plan, which no doubt is part of its attraction for iPhone users. We noted just last week that Sprint stock is well on its way to doubling and there’s no reason to change that prediction today.

MetroPCS shares are up more than 34% at $8.44 in a 52-week range of $5.53-$16.81, with more than 10 million shares changing hands before noon.

Sprint’s shares are up more than 15% at $3.88 in a 52-week range of $2.10-$4.58, with nearly 140 million shares already traded today, 3x average daily volume.

Paul Ausick