PCS notes:

Research Baird, BSC, TWEI (6/22 – 6/28/07)

• Named Thomas Keys to president & COO (succession planning for CEO) – was previously Sr. VP of marketing

• Company product (unlimited calling plan) popular with youth and ethnic minority customers

• Baird expects revenue growth 55% in ’07 and 41.5% in ‘08

• Preparing to launch service in LA (demographic fits well with company’s target market)

• Company has higher churn rate than peers but has lowest CPGA (Cost per gross addition) of approx $100 and lower operating cost per subscriber

• Appears to be fully funded after raising $862.5m in IPO

• Some spectrum issues after auction – could be some delays

• 85.6% of IPO shares in 180 day lockup (much in private equity hands)

• Operating in 7 of top 25 US markets – adding NY, Boston, Philly and LV in next 2-3 years.

• Exposure to illegal immigrants higher than other carriers due to concentration in cities with higher immigrant population

  • This increases potential customer base larger than posted population statistics

  • Bear does not expect these figures to decline

• Company offers pre-paid unlimited calling plan – opens door for many that could not get approval for similar services from other carriers.

• Thomas Weisel believes additional funding may be necessary

• No collection risk and does not have to hold reserves for bad debt.

EPS Release and Conf Call (Q3) 11-14-07

• Launched service in LA

• 70% increase in EBITDA – Service revenue $489m up 47% (total $557m up 41%)

• Core market penetration 11.3% versus 9.8%

• Net Income $53m up 81% - EPS 0.15

• Addition of approx 114k subscribers (Q3 traditionally seasonally weak)

• Seeing signs that economic slowdown could result in 23-30% reduction in net additions during Q4

  • Economic slowdowns may increase company’s penetration rate

  • No subscriber bad debt and low cost structure position PCS well

  • 85% of customers use PCS as primary telephone service

• 2008 expects to add 1.25-1.52 net subscribers with EBITDA of $750-850m

• Were not able to engage Leap Wireless in meaningful negotiations

• 70% of core market subscriber additions have been during Q4 and Q1

• 1.5% of churn includes existing customers allowing old phones to expire and purchasing new phone with service plan

• Entering mass market by offering distribution in Target and Wal-Mart beginning midway through Q4

• ARPU $42.77 – flat with Q3 last year

• Finished with 1.7b in cash – total leverage 4.45 times – average cost of debt roughly 8% and 80% is at fixed rate by hedging for next 2 years.

BSC – 11/15/07 report

• New markets like Philly, Boston, Las Vegas may not generate EBITDA until 2010 but are strong value propositions

Wachovia report 1/16/08

• High degree of confidence in market launch schedule for new cities

• Expect LA to be tracing well and for company to hit 300k net adds (above street expectations)

IBD Article 12/26/08

-          Shares up 309% since 11/21 – Leap shares up 80%

-          Investors betting that consumers will switch to low cost plans

-          Both service households typically that have $45,000 or under income

-          Other options include pre-pay minutes from other carriers

-          Leap and PCS do not perform credit checks or require signed contracts

-          2009, PCS to launch service in NY & Boston, LEAP to launch in Chicago and Philadelphia

-          Merger between two had been possibility but now doubtful with credit crisis.

 

EPS Release 11/5/08

-          Quarter highlighted by strong subscriber growth and reduced customer churn rate

-          Surpassed 5 million subscribers

-          Q2 rollout of “metro flash” product allows customers with CDMA handset to subscribe without purchasing new phone

-          First city in Northeast – Philadelphia – went live Q3 – building out more planned northeast cities (boston and New York City)

-          Revenue 687 million – up 23% - EPS 0.13 versus 0.15 last year

-          Confirming guidance 2008 net subscriber additions 125-152 million

o        2009 net subscriber ads 1.4 mil to 1.7 mil – capex $0.7 -0.9 bil

o        Expects to be cash flow positive late 2009

-          Finished quarter with cash of $1.02 billion – long-term debt $3 bil

-          Balance sheet – total stock holders equity $2.02 billion but FCC licenses $2.4 bil

EPS Release 2/26/09

-          Q4 revenues $724 mil up 22% - adjusted EBITDA $194m – up 27%

o        Net income $15mil versus loss of $47mil last year

-          Net subscriber ads of $520,000

-          Finished year with 5.4 mil subscribers

-          “Voice continues to go wireless and wireline replacement trends continue to accelerate”

-          Reported net subscriber growth of 35% or more each of last 6 years

-          Launched service in Philadelphia and Las Vegas in 2008 – and Feb 4 launched in NYC and Boston

-          ARPU of $40.52 is $2.31 below Q4 2007 and $0.21 below Q3

-          Cost per gross addition $119.82 down $21.60 from Q4 2007 driven y 55% increase in gross additions

-          Re-affirms guidance for 2009:

o        Net subscriber additions of $1.4-1.7 mil

o        Adjusted EBITDA $900 mil to $1.1 bil

o        Capex 0.7 bil to 0.9 bil

o        Reach free cash flow positive late in 2009

-          Balance sheet down to 697 mil in cash from $1.47 bil in 2007

o        Long-term Debt 3,058 mil

 

Barclays Note 2/26/09

-          ARPU stronger than many expected – especially after announcement from LEAP

-          Gross ads a bit above street consensus (pre-released 1/6) but churn rate also high.

 

RAJA Note 2/27/09

-          Thursday EPS report: Net additions 520,000 – already pre-released

-          ARPU $40.52 – should see this stabilize in low 40’s in 2009

-          Launched in NYC and Boston Feb 4 – now has coverage in 9 of top 12 US Markets

-          Reaffirmed guidance for net adds (1.4-1.7 mil)

-          Capex projected at 0.7-0.9 bil versus EBITDA of 0.9-1.1 bil

-          RAJA price target $30 – (8x adjusted 2010 EBITDA)

-          Estimating EBIDA CAGR of 22%