Roger Linquist - Founder, Chairman, Chief Executive Officer and President Thomas Keys - Chief Operating Officer J. Carter - Chief Financial Officer and Executive Vice President Keith Terreri - Vice President of Finance and Treasurer

John Hodulik - UBS Investment Bank Craig Moffett - Sanford C. Bernstein & Co., Inc. William Power - Robert W. Baird & Co. Incorporated Philip Cusick - JP Morgan Chase & Co Jonathan Chaplin - Crédit Suisse AG Richard Prentiss - Raymond James & Associates, Inc. David Barden Brett Feldman - Deutsche Bank AG

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the MetroPCS Communications First Quarter 2011 Conference Call. [Operator Instructions] This conference call is being recorded today, May 3, 2011. And I'd now like to turn the conference over to Mr. Keith Terreri, Vice President and Treasurer for MetroPCS. Please go ahead, sir.

Thank you, Allen, and good morning, everyone. I'm Keith Terreri. I'd like to welcome you to our first quarter 2011 conference call. The speakers with me this morning are Roger Linquist, our Chairman, President and Chief Executive Officer; Tom Keys, our Chief Operating Officer; and Braxton Carter, our Executive Vice President and Chief Financial Officer. The format for today's call is as follows: first, Tom will provide an update on a number of operational results and initiatives; then, Braxton will review the financial highlights of the first quarter of 2011; and then Roger will provide an overview of our business, followed by a question-and-answer session. During today's call, we will refer to certain non-GAAP financial measures. We have reconciled these historical non-GAAP measures to GAAP measures on our earnings release, which is available at www.metropcs.com under the Investor Relations tab. Before I turn the call over to Tom, I want to remind you that certain information that we will discuss in this conference call may constitute forward-looking statements within the meanings of federal securities laws. Forward-looking statements are any statements not of historical fact that involve risks, assumptions and uncertainties that may not occur or could cause actual results or the timing of events to materially differ from those made in the forward-looking statements. Words such as believes, anticipates, expects, intends, plans, should, could, would, view, estimates, projects and other similar expressions typically identify forward-looking statements. Forward-looking statements include, but are not limited to, statements we make regarding our future operational or financial plans, our prospects for success and our positioning in the highly competitive wireless industry. Furthermore, included in our forward-looking statements are statements regarding the effect of seasonality on our business, the value of our services, the outlook for growth and churn in future quarters, pricing, our subscriber mix, opportunities related to handsets' availability and pricing, our expected buildout of our 4G LTE network, it's worldwide growth, and the potential economies of scales to be obtained, our positioning from a balance sheet perspective and cost competitive position, our estimates of capital expenditures and other statements which are not historical. Management may make additional forward-looking statements in response to questions. Additionally, our forward-looking statements are subject to the risk factors described in our earnings release in our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, copies of which can be obtained free of charge from the SEC at www.sec.gov, or from our website or directly from contacting the Investor Relations Department. We encourage you to review these documents. We have also provided supplemental slides that are available for download and printing on our Investor Relations website. These slides may contain forward-looking statements. We may refer to these slides during our prepared remarks and in response to questions. I'd like to remind you that the results for the first quarter may not be reflective of results for the full year or any subsequent period. For anyone listening to a taped or webcast replay, or reviewing a written transcript of today's call, please note that all information presented is current and should be considered valid only as of May 3, 2011 regardless of the date reviewed, read or replayed. MetroPCS disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or developments or otherwise except as required by law. The company does not plan to update or reaffirm guidance except through formal public disclosure pursuant to Regulation FD. Certain terms that are used in today's call are registered trademarks of MetroPCS. We intend to file our quarterly report on Form 10-Q for the period ended March 31, 2011, with the SEC by May 10. At this time, I'd like to turn the call over to our Chief Operating Officer, Tom Keys.

Thank you, Keith. Good morning, everyone. First quarter was a record quarter for the company. We recorded the highest net subscriber additions in company history of over 725,000, bringing our total subscriber base to approximately $8.9 million. We also recorded very strong gross additions of over 1.5 million for the quarter. In the last 12 months, we have added over 1.5 million net subscribers, resulting in a 21% increase in our subscriber base and a penetration rate of 9%, up from 7.8% just a year ago. This is a tremendous rate of growth within a very competitive wireless industry. Also noteworthy in the quarter is our record low churn of 3.1%, down 60 basis points from last year's first quarter. Additionally during the quarter, we ran a successful handset promotion. During this promotion, we effectively managed the cost of customer acquisition. Our cost of churn in the first quarter is best of class in the wireless industry at below $5. Looking towards our second and third quarters, I want to emphasize the seasonality inherent in this business. Historically, we've seen gross adds decrease, churn increase and net adds decrease during the second and third quarters of the year. It is possible that seasonality could accentuate in 2011, given the significant performance in the first quarter. We believe we can manage churn within the 3% to 4% range on a go-forward basis. At the end of the first quarter, approximately 90% of our subscribers were on a tax-inclusive plan. In 2010, a little over half of our subscriber base upgraded their phones. In the first quarter of 2011, the upgrade trends continued, and 16% of our subscribers upgraded their handsets, compared to 14% during the first quarter of 2010. Android handsets have been very popular with our subscribers, representing approximately 30% of gross additions in the first quarter. Our current strategy is to utilize a slightly higher handset subsidy as we reach out to new segments and introduce our value proposition, while being mindful of our total CPGA spend. As we work to bring additional value to our subscribers, we are continuing our evolution as a no-contract wireless provider. Wireless for All was the first step in our ongoing evolution. It transformed the way we approach the customer and provided great value at a predictable and affordable price. Our evolution continues as we are in the early stages of Phase 2, Android for All. We see a tremendous opportunity with the capabilities of smartphones running on the Android operating system. We currently offer 3 Android handsets and expect to introduce additional 3G and 4G LTE Android smartphones in the future. In time, as handset price curves come down and the industry scales, we plan to move towards the final phase of this campaign, LTE for All. With the recent launch of 4G LTE in Tampa, we have introduced 4G LTE service in all of our major metropolitan areas. Our 4G network is performing well, and we continue to expand our footprint within the markets and expect to complete the majority of the buildout by the end of 2011. Introduced towards the end of 2010, Metro USA provides MetroPCS subscribers with national coverage and a footprint that covers over 280 million POPs. National coverage provides our subscribers with incredible value and puts us at parity with the larger postpaid carriers, as we continue to provide a postpaid experience and a Pay-In-Advance, No-Contract model. We believe providing this enhanced experience on a no-contract basis has allowed us to transition to new customer segments and significantly increase the brand's value for our existing subscriber base. We have the best-in-class cost structure, and we are constantly working to leverage this cost structure to increase our market share. Operationally, we continue to be heads down, as we focus on execution at every level. Within our markets, some macroeconomic headwinds persist. Wireless continues to be a competitive space, but we are very pleased with our ability to plan, execute and deliver outstanding results during this first quarter. MetroPCS provides a platform for consumers to convert to the no-contract service model while upgrading to new 4G LTE service plans for their broadband needs. We are very excited about the future. And now I'll turn the call over to Braxton. J. Carter: Thanks, Tom. Good morning. We reported record first quarter 2011 operational and financial results. We ended the quarter with approximately 8.9 million subscribers, up 21% from first quarter 2010 and up 47% over the past two years. Even with the first quarter's record net subscriber growth, we also recorded our highest first quarter adjusted EBITDA in company history of $285 million, up approximately 28% year-over-year. This is the 10th quarter in a row in which we have reported year-over-year adjusted EBITDA growth of well over 10%. Building on what was a strong 2010, our record first quarter results are largely due to three factors: our successful launch and execution of Wireless for All service plans; our Android smartphones; and our focus on managing our superior cost structure. We have a very strong balance sheet and substantial liquidity with approximately $1.7 billion in cash and short-term investments. In March, we completed an amendment, restatement and expansion of our senior secured facility to expand the facility to include a new $500 million term loan. The new funds can be used for general corporate purposes, including opportunistic spectrum acquisitions. This amendment also modified certain limitations under our credit facility, including limitations on our ability to incur additional debt, fill assets and make certain investments or acquisitions. In addition, we are no longer subject to certain financial covenants, including maintaining a maximum senior secured leverage ratio. Our total leverage was 3.5x computed in accordance with the indentures governing our senior notes at the end of March, and our net leverage at the end of the first quarter was approximately 2.1x. Based on a very manageable maturity schedule, a weighted average cost of debt for the quarter of approximately 6.1%, the majority of our debt fixed by its nature or through interest rate swaps and our significant liquidity, we believe we are very well positioned from a balance sheet perspective. Churn for the quarter was 3.1%, a record low for the company and down 60 basis points year-over-year. This decrease in churn was primarily driven by the continued acceptance of our Wireless for All offerings, including a decline in false churn as a combination of our realigned dealer incentives and stronger value propositions took effect. Please note that Wireless for All was introduced during the first quarter of 2010, so the benefits from the reduction of false churn were not fully realized in the first quarter a year ago. Additionally, with the seasonality inherent in this business and with the significant performance we had in the first quarter of 2011, we expect churn to increase and net additions to decrease during the second and third quarter. Our first quarter 2010 -- 2011 ARPU was $40.42, up $0.59 on a year-over-year basis, and up $0.63 on a sequential basis. This is the first time our ARPU has exceeded $40 since the fourth quarter of 2009. The increase in ARPU year-over-year was primarily due to continued demand for our Wireless for All and 4G LTE rate plans. The burden on ARPU for our tax-inclusive plans continues to be in the $4 range per subscriber. This is the second quarter in a row in which we have reported a sequential increase in ARPU. Our CPGA continues to be one of the lowest of any facilities-based wireless carriers in the U.S. For the first quarter, our CPGA was $157, up $11 over the prior year first quarter. This increase was primarily due to an increase in promotional activities. As can be seen in our supplemental slides, our current cost churn is below $5, which is truly best-in-class. Our business continues to scale, and our CPU continues to be among the lowest in the wireless industry. Our CPU for the quarter was $19.79, as compared to $18.79 in the prior year's first quarter. This increase was primarily due to an increase in retention expense related to handset upgrades by existing customers and the inclusion of regulatory fees in our Wireless for All service plans, as well as costs associated with our 4G LTE network upgrade. Adjusted EBITDA for the first quarter was $285 million, an increase of approximately 28% year-over-year. Our adjusted EBITDA margin for the quarter was 27.2%, compared to 26.2% in the first quarter of 2010. Over the last 12 months, we have generated record adjusted EBITDA of $1.2 billion. This is particularly impressive given the potential margin dilution that could have occurred with the Wireless for All service plans, the significant increase in handset upgrades and our 4G LTE network rollout. I'd like to highlight a few items from the income statement and cash flow statement. In the quarter, on a consolidated basis, our service revenue and cost of service grew 23% and 20%, respectively, to $1.1 billion and $340 million, respectively, over the same quarter in 2010. The increases are primarily due to the growth of our subscriber base. Our consolidated selling, general and administrative expenses were $170 million for the first quarter of 2011, representing an increase of $10 million when compared to the year-ago quarter. We generated $138 million in cash from operating activities in the quarter, a decrease of approximately $87 million from the prior year's first quarter. The decrease was primarily driven by a decrease in cash flows provided by changes in working capital. We incurred capital expenditures of $187 million during the first quarter. During the last 12 months, our unlevered free cash flow was approximately $400 million. Our results demonstrate our continued focus and ability to grow the business while generating cash flows over the long-term. Our updated current estimate for total 2011 capital expenditures is $700 million to $900 million. This is an increase over the guidance given on the 2010 year-end earnings call and is primarily driven by the record first quarter net subscriber additions in capacity expenditures, in turn driven by the popularity of our Android handset offerings. We generated $56 million in consolidated net income during the first quarter, representing year-over-year growth of approximately 149% or $0.15 per share, compared to approximately $23 million and $0.06 per share in the prior-year quarter. I'd now like to turn it over to Roger.

Thank you, Braxton. From an operational and financial viewpoint, I'm very pleased with this quarter's results. With our record 1.5 million net subscriber additions in 2010 and this quarter's 725,000 net additions, subscriber growth has been truly outstanding. As we approach the 9 million subscriber milestone at the end of the first quarter, it is revealing to think that we crossed the 5 million subscriber milestone at the end of 2008, just over two years ago, and have grown subscribers at over a 33% CAGR since 2005. In a very competitive marketplace, this is truly exceptional rate of growth. Clearly, the No-contract segment is here to stay. It's a frontier that we've pioneered. From the viewpoint we are seeing, an ongoing shift towards no-contract wireless service. The traditional wireless contract has served its purpose, which was to essentially allow customers to reduce their upfront costs and buy handsets on installment plans. Prices for future phones over time have declined, and we believe that in the future, the same will happen with smartphones. At some point, there is no need for a contract obligation, when a customer is looking at a sub-$200 fully featured 4G smartphone. We believe we are well positioned to capitalize on this opportunity, having built and maintained our cost-leadership position in the No-Contract segment since the launch of our business in early 2002. Our current smartphone ecosystem is accelerating and as Tom indicated, we expect to introduce 3G and 4G smartphones in 2011. With a focus on the small screen, we view this year as the year in which we will introduce a number of touchscreen Android smartphones. Subscribers are increasingly using their smartphones for entertainment and social networking as the Internet has gone wireless. All of our major metropolitan areas now have 4G LTE, establishing our leadership position in this transformational technology. 4G LTE has become a dominant world force. With world volume of handsets on a single 4G LTE standard, we have an opportunity for substantial reductions in handset prices. With our focus on operating a low-cost facility-based model, we are very well positioned in this new Android world to provide subscribers a great value. MetroPCS is taking the first step to migrate to a spectrum-efficient technology 4G LTE. As data requirements continue to expand, we are always interested in opportunistic spectrum acquisitions, and we are evaluating all potential sources. We've had a great start to the year, both operationally and financially. We believe that we are well positioned from a competitive standpoint, and we see continued opportunities for growth, as subscribers' demand for smartphones increase. We delivered record net additions this quarter, and we intend to continue to leverage our cost-leadership position and drive further profitable growth. Clearly, there are economic headwinds that the industry will be facing in the balance of 2011. These factors include rising gas prices, unemployment and a depressed housing industry. However, consumer interest in upgrading cellphones to smartphones, while managing the service costs, are encouraging trends for the No-Contract segment. With strong first quarter momentum, a cutting-edge 4G network, an exciting lineup of smartphones and our leadership position in the no-contract space, we believe we are well positioned to continue our profitable growth. While this is a competitive space, Wireless for All, introduced in 2010, successfully transformed the company. This year, we will continue to innovate and push the industry with Phase 2 of the transformation, Android for All. In the future, the wireless experience will be further enhanced as we move towards the third phase, 4G LTE for All. I'm very pleased with this quarter's results, and I look forward to updating you on our progress throughout the year. Thank you. Operator, we will now begin Q&A.

[Operator Instructions] And we'll take our first question from Brett Feldman at Deutsche Bank. Brett Feldman - Deutsche Bank AG: Towards the end of your comments, you're talking about spectrum. I realize you're looking at a lot of opportunities, but I was wondering if there's any broad criteria you can give us in terms of what's interesting to you. For example, are you only considering PCS and AWS bands? Is there a certain type of spectrum that's completely uninteresting to you? And then, just as a follow-up to one of the data points you gave. You talked about how 30% of gross adds in the quarter were Android smartphones. I was wondering if you can give a statistic for what percentage of total handset sales, including upgrades, were smartphones, and what the smartphone penetration was at the end of the quarter?

Let me take the first part of that, then I'll hand off the last part to Tom. PCS and AWS spectrum are, obviously, is what we're using now. I think the nature of what is available is going to suggest that we look as broad in the range as we can. Obviously, we have purchased some 700 megahertz that is not readily available now. But we look to the future options, and we hope the AWS band, AWS-2 will be available in the not-too-distant future. But to answer your question directly, we'd be looking at bands that we think are compatible with our existing wireless infrastructure. Tom?

Yes, Brett. On the second point, with regard to Android grosses, we talked about 30% of the grosses were Android. On the upgrade front, you can look at that as about 40% of all the upgrades were Android. That's approximate. And probably the existing base is under 20%, today. Brett Feldman - Deutsche Bank AG: Great. And then just one quick follow-up question here, Roger. There's some expectation that we might see some divestitures coming out of AT&T and T-Mobile. If you could you just share your thoughts on whether you would actually be interested in acquiring entire operating markets. I think it's obvious you might be interested in the spectrum, if for whatever reason, that was available.

Good question. We're not sure what the result will be, but we think that from our standpoint -- I'll take this question as an AT&T, T-Mobile acquisition, we would hope very much that this concentration of spectrum and market power would lead us to divestitures of spectrum, as opposed of subscribers, network and spectrum. So we'll have to see how DOJ and FCC operate and what their decisions and final rules will be. But certainly, that would be a source of spectrum and potentially and we think that's an important step for the industry.

We'll take our next question from David Barden at Bank of America Merrill Lynch.

I guess, a couple and I apologize if they've been touched on a little bit. But just one, maybe Tom, you could talk a little bit about how BOGO influenced the first quarter results and kind of what your thinking is promotionally speaking as you get into the second quarter, which has traditionally been kind of your refresh period. Second, obviously, you guys had really strong success with a retail-focused model. Obviously, others have been betting that the big-box retailers are going to be the channel of the future. Kind of what experience did you have this quarter that either reaffirms your faith in the retail model or kind of makes you think more expansively about channel distribution? And the last one would be, maybe just some color on how the gas price trajectory in the last month or so has potentially impacted or could impact results into the second quarter.

David, this is Tom, I'll take the first two pieces, and then I'll throw the third one over to Roger. So on the BOGO, we think that the impact on gross additions was certainly less than 15%, at the end of the day, on new handsets that were from the promotion. We considered it a pulse marketing opportunity, where for the first quarter, we believe there was a great opportunity for MetroPCS to grow that base. So we felt that was a good way to do it, while being mindful of other CPGA elements that we purposely held back on, knowing that we would have some form of handset subsidy involved in the quarter. For the second quarter, we probably looked to optimize our branding and our advertising, trying to look at more opportunities to take consideration to actual purchase. We think we have a lot of headwinds from Wireless for All, and as mentioned on the call, in Phase 2, which is really Android For All, looking at the next round of handsets as we introduce new 3G and 4G handsets we talked about into the end of the quarter and into the third quarter. We think that will help refresh the lineup as well. With regards to your question on retail, we always think that retail is a great branding opportunity for the company to gain new awareness into new segments. We believe the movement is away from feature phones into smartphones, and it's a great place to put smartphones. We get good brand awareness. We do that in places like Best Buy, and they do support our opportunities. But we also know that inside of our own distribution, we've spoken about this being a consultative sale. This takes time at the counter, this takes people to understand the differences between a Windows 7, a Windows 6, an Android operating system. So at the counter, we can do that. We can ask questions. We can satisfy needs. So we don't think that goes away, but we think that retail is an important part of the branding awareness that we take into the future. Roger, you want to take the third part?

Yes. The notion was and the question is gas prices and its impact. I think there is an impact, and we will see it. I think we have been seeing it as the rising gas prices. But I would call your attention to the fact -- a comment I made earlier, that consumers, as they have an interest, are trying to manage all their expenses. So it's not just the acquisition of a new phone, it's the savings that they can realize on service plans month to month. And as I could point out to you on the family plans, our family plans for Android phones can save customers at least $1,000 if not $2,000 a year for a family of 3. So those factors have to be included. And I think we're going to begin to see people rationalize, not just whether or not they buy a handset but rationalize whether they're willing to continue to pay these elevated prices for service.

All right, great. Congrats guys.

We'll get our next question from Ric Prentiss at Raymond James. Richard Prentiss - Raymond James & Associates, Inc.: Before any question, I apologize if it's been asked. If you think about the seasonality -- first, very strong results obviously. As you think about the changes you've made to your business model, as you think about the new environment of wireless, how do you see the seasonal trends playing out as far as churn, as far as EBITDA margins? And just kind of where you think we're headed in this industry and your unique spot in it.

Well, let me take a first shot at that. It's been -- this is going on our 10th year. And we plot what our gross gain or gross sales are and net gains. And it's amazing that the one trend that you can bet on is the amount of acceleration we get in the first quarter and then the ease that is the subscriber reductions that we would realize in second and third. I think we have another mechanism ongoing this year, which is a plus, and then that's the Android adoption rate, which has been very significant. The negative, of course, that could really fully offset this is the elements that I've talked about, not only the unemployment, gas prices but also the housing industry decline, which I believe, at least as it relates to our market segments, has a very, very significant impact because of the general nature of the trades business and the like that could be more disproportionate within our customer base. But I do think that this so-called tsunami in upgrading phones, both the QWERTY, as well as the smartphone, it is a positive story along with those headwinds that we've talked about.

Ric, this is Tom. I would probably add that what we have to do -- it's really incumbent upon us in the second and third quarters to remain what we call the best deal in town. We have to be easy to do business with. It's got to be real simple when you come in to explain our value proposition. We have to make sure we have inventory in the stores. We have to make sure now that we have all of our POS, all of our advertising lined up. It sounds pretty simple, but this is that heads-down thing we talked about. We have to be able to execute second and third because we do realize that seasonality plays a part to it. I would also say that we're pleased with the momentum in the second quarter, as we see it today. J. Carter: Ric, on a final point, I think it's important to look at the full year in context versus any individual given quarter. We have a supplemental deck impact that documents historically some of the seasonality in the business. But if you step back from the quarters and you look at some of the key statistics that were thrown out, an increase in subscribers at a 33% CAGR since '05, the growth in the EBITDA, the fact that we put over 1.5 million net additions on last year. And you look at this first quarter in context, it's already 70% of consensus for 2011 from a growth standpoint. Certainly, the second and third quarters are the slowest quarters for this model, but we really need to look at the full year in context and keep things in perspective. Richard Prentiss - Raymond James & Associates, Inc.: Makes great sense. Maybe one quick follow up. With all the smartphone discussions, I agree that it really seems to be taking off. What about the cost idea? We've heard a lot of carriers starting to talk globally about the Android phones cost curve really starting to come down quarter over quarter over quarter. Where do you see the smartphones that you're able to get on the Android system headed to?

I think we'd rather not give a bottom. Richard Prentiss - Raymond James & Associates, Inc.: But is the trend safe to say that you're seeing noticeable drops as you go month by month?

More OEMs are interested in working with us. Continually, we're engaged with them now multiple times a year. We're overseas. They're over here. We have continued engagement every week with them, developing the next model, the next handsets to come out. So we feel confident that the ecosystem's going to come down and as well as every other carrier who works with them. So that the natural scale will help bring this thing down, and then, inside of our model, we think our customer base has really spoken with their wallet when it comes to Android.

And I wish to add one point to that. I think that the great expectation that we have is that once you begin to get the carriers around the world, vested and operational in 4G LTE, that you're going to see a tremendous price impact with the learning curves, operating on a world standard, one world standard, which I think is going to carry a very significant development, probably not before 2013 or '14, but when that happens, I think you're going to see something that's very, very parallel to the PC. Richard Prentiss - Raymond James & Associates, Inc.: I agree.

And we'll get our next question from Craig Moffett at Sanford Bernstein. Craig Moffett - Sanford C. Bernstein & Co., Inc.: Two questions. Roger, I wonder if you could return to the conversation about spectrum for a second. As you look out, when do you think you absolutely need spectrum, and when do you see spectrum exhaust, if you will? Or is it something that simply through cell splitting, you think without spectrum, you can still manage through? And then second if you could just add some more color for where your customers are coming from. You talked a lot about the smartphone numbers. Are those customers primarily coming from postpaid feature phones and as they look to upgrade, realize that the budget is beyond their means? Or are you still getting a lot of first-time customers from other prepaid carriers?

Good questions. When do you exhaust on spectrum, I think the answer to that is that the cell splitting that we intend to use is one certain feature for avoiding, shall we say, exhaust, which is a very punitive term, obviously. The fact is that I think in the new spectrum additions in the 2013, 2014 time frame would offset what we believe would be the higher cost of simply cell splitting our way out of [indiscernible] more capacity. So for me, that's a future time. I don't think there is the exhaust time or we simply don't have more capacity, but I would suspect that in a couple, 2 or 3 years, spectrum additions are going to be needed for us to continue growth not in every market, but in certainly select markets where our productivity and our penetration is the highest. And then on the customer focus or the customer side, you want to take that, Tom?

Yes. Craig, I would say that if you looked at our customer base right now through some of the survey work we've done, we probably see about 20% to 30% of our customers are new. Meaning they haven't been in wireless before, and that's probably attributable to people who add onto family plans or people who are just coming of age to get their first phone. And we become a viable alternative because of the no-contract space. Inside of the surveys we've done, we've also seen 30% to 40% of the people say that they previously had a contract. Obviously, there's a gap of about 20% to 30% in there that don't identify themselves in that way. But we think there's certainly a migration from contracted customers who find us appealing to look at, find more people consider us. And then depending upon when the contract does expire, then they give us an opportunity to convert.

Let me come back to just a point that you've asked me because really, we're converting and making a transformation to our 4G systems. So as that takes place, one of the difficulties to answering and addressing your question in a very crisp way is that there's a crossover point where the subscribers that we can put on -- and this is with VOLTE, this is with voice and data -- it gives us the opportunity to refarm our CDMA spectrum. So it's really the cost of the handset that's going to be a fundamental driver in our ability to make that transformation earlier rather than later.

And next, we'll go to Phil Cusick with JPMorgan. Philip Cusick - JP Morgan Chase & Co: First, Roger, can I just follow up on the VOLTE comment. When do you expect to deploy that?

Well, there's a -- let me be very clear. In testing, we fully expect to be testing before the end of the year. Commercial deployment is going to be a 2012 event. But for us, it's very important that we begin taking advantage of this network, 4G, for voice customers, as well as data. So we will probably be in the leading edge not because we want to be there, but because we think it's in our very best interest to have this transformation begin as the volume on 4G LTE grows. Philip Cusick - JP Morgan Chase & Co: Right. And to that end, how do you expect the sort of retail price of 4G handsets to go this year? Right now we've got one at $300, that's the older. We've got the Android at $400. Could we see this sort of sub-$200 by the end of the year?

I don't think that you can see that this year. I do very well think you will see that next year. Philip Cusick - JP Morgan Chase & Co: Okay. And then if I can just do one more. I've been trying to think about the sort of skin in the game that customers have. We used to talk about this a lot. And I would think now, customers are walking out with sort of an average of $100 to $200 in the game, whereas a couple of years ago it was maybe $50 to $100. Can you give some numbers around that, maybe just qualitatively, if not the exact numbers?

Phil, are you really talking about what the consumer's paying out the door for the handset with airtime or just the handsets? Philip Cusick - JP Morgan Chase & Co: Yes. Sort of like when people walk out the door, they used to walk out for $50 or $100 for the low-end handset and the free month upfront. And today, I've got to think it's much more. And it's probably one of the drivers why your churn is coming down over time. Can help us think about that?

One of the real differences with Wireless for All is somebody is paying their first bill at the time of handset acquisition, whereas before, they got a free month worth of airtime, and 28 days later they got their first text message. And they were getting trained in to how to pay an electronic wireless bill. So we actually get a better conversation at the counter by having to charge for the first month because now people understand what they're buying. They understand the value proposition for 40, 50 or 60. So they walk away feeling better about themselves and better about the service. We finally get a much more satisfied customer when they pay their second bill because they understand exactly what they got for the first month. So what we did with Wireless for All, we reduced the price of the handset. So net-net out the door, it's not that much different on some handsets when you look at the airtime with handset pricing. But also as we've moved to more smartphones, away from more lower-end buyers of QWERTYs and flips, we're going to find that price is substantially higher based upon the greater features in the handset. On average, you might find the customer out the door anywhere between $99 and $179 today depending upon the handset they chose.

Yes, and as it relates to the question on LTE handsets. I stand by that as a wholesale pricing, that's what I assume you were talking about. But with our ability to promote, particularly with a mail-in-rebate or MIR as we would call it, we certainly will be at the $200 level below by the end of this year. Certainly, we'll have some products going out in that range.

We'll take our next question from John Hodulik at UBS. John Hodulik - UBS Investment Bank: Guys, from the slides, some of the things that stand out, I think was the 16% upgrade rate and then the noticeable improvement you saw sequentially in year-over-year in churn. Can you first talk about where you think that upgrade rate will top out? And given the progress you've made in churn and how obviously it's correlated with the smartphones, could we see continued acceleration in ARPU as long as that upgrade rate remains high? And then maybe a quick follow-up on sales question. I mean, I know it's early, but do you have a sense that the churn in the smartphone base is meaningfully less than what you got in sort of the overall base? J. Carter: John, I think there is a couple of things to look at here. When you look at the upgrade trends, 2009 basically 1/3 of our subscribers upgraded their phones. In 2010, half of them did, which implies an average life of six months. You have an acceleration in 1Q '11 over 1Q '10, 16% versus 14%. We don't have the crystal ball telling us exactly where these percentages are going to go, but some of the fundamental drivers of why the first quarter is a stronger quarter for us also typically results in a higher upgrade percentage. And you can see that in some of the historical patterns. So based on historical, we would expect the upgrades to dip down in the second and third quarters as part of the normal seasonality and then move back up in the fourth quarter. But the smartphones really are the driver for what is happening in the first quarter of '11 versus the increase in the first quarter of '10 to that incremental 2%. Tom, do you want to add something there?

Yes. I want to add that the theory or the case behind smartphone and smartphone churn customers is that there is a 4-for-1 utility that people derive from the device. Its home voice, mobile voice, mobile broadband and then a fixed mobile convergence in the home. So we think there is a greater dependency by that customer who doesn't have to have 2 to 3 different applications and/or devices who could use our service and get that 4-for-1 utility. So the theory would really tell you that potentially there's a greater churn metric for smartphone customers than feature customers have shown us in the past. John Hodulik - UBS Investment Bank: And do you expect all that to continue to manifest itself in ARPU? I mean, obviously, return to growth, we got the 1.5%, which is great quarter-to-quarter change. But with all the new smartphones and the faster upgrade rate, would you guys expect to, can see that ARPU growth accelerate as you move throughout the year? J. Carter: I think that our public position has been that what we're seeing is a large amount of stability with ARPU. I mean, certainly, there are positives with smartphone great plans being on a higher mix, but you need to balance that against we are increasing family plan. The BOGO, which Tom talked about being 15% of our first quarter activity, you had to have a family plan to do that. So that increased penetration with family plan. There are offsets. We're very encouraged with the trends that we're seeing in ARPU, but we still like to talk about the business being very supportive from an ARPU standpoint. I think your final question really related to churn, and could churn be lower on smartphones. You've got to remember that we just really started with the Androids in December of last year. And we're certainly seeing a great deal of momentum with the Androids. But it really is too early to comment on any particular differences with the base on those phones.

And next, we'll take a question from Jonathan Chaplin at Credit Suisse. Jonathan Chaplin - Crédit Suisse AG: A couple of quick ones. First, with CapEx moving higher to deal with all of the capacity utilization from smartphones, what should we be thinking as sort of the trend for CapEx in 2012 once you've got the LTE spend behind you? And can you give us a little bit more granularity on where the spend is going? Is all of the usage based CapEx going into LTE, or are you adding capacity in CDMA as well? And then secondly, just switching over to CCU, how much of the increase in CCU was LTE-related? What I'm trying to get a sense from is whether there's a prospect of CCU beginning to sort of stabilize at these levels, given that the bulk of the LTE percent is behind you. Assuming that the upgrade rate starts to level out, can we start seeing some leverage on the CCU line as ARPU grows? J. Carter: Let me answer the CPU question, touch base on a couple of CapEx issues and then, turn it over to Roger for further comment. Let's start with the CPU. The largest drivers in the increase in CPU year-over-year were the upgrades and the fact that we have Wireless for All with regulatory fees being included in CPU. And let's talk about the regulatory CPUs. When we launched Wireless for All in January of 2010, we did a forced migration of 30%. You heard us comment today that base, we now have 90% of our base on Wireless for All. And we've also commented in the past that our regulatory fees are slightly less than $1. So you could do the math to show the incremental pressure on CPU, which is roughly half of the CPU increase is related solely to the penetration of the base for Wireless for All. So that pretty much is where the run rate is. The second factor impacting CPU is upgrades. And you saw an increase in the gross volume of upgrades Q1 '11 over Q1 '12 as we've talked about. But as Phil Cusick pointed out, we also have seen an increase in sales price of the phones, and we've seen higher subsidies, as we've commented, as we promote the Androids. So that was the second most significant part of the CPU increase. The LTE expansion, again remember, we're laying systems and putting OpEx in well before we even launched the markets. And then as we scale, you'll see efficiencies and scale benefits come out of it. But that was the least significant part of the CPU equation. Hope that helps to answer the question there. On CapEx... Jonathan Chaplin - Crédit Suisse AG: It sounds like -- just on CCU before you move on to CapEx, that you should expect CCU to stabilize here and then come down as subscribers continue to grow, when you sort of put all of those 3 elements together. Is that right? J. Carter: Yes, I think when you look longer term, you should see some continued scale benefits, as we continue to grow the base. And we've also talked about as we fully migrate to LTE, how efficient that is from a CapEx and an OpEx standpoint, given the much more fixed cost structure, which will allow scaling. So yes, we believe that a lot of the initial factors regarding the CPU increase year-over-year have been already baked into the run rates. Going on to CapEx. I want to clarify one thing. When we gave the color on the increase in guidance, we said it was really due to 2 factors, not just the capacity being driven by the Androids, but it was also being driven by the record subscriber performance that we experienced in the first quarter. Having a growth rate of 725,000 net subscribers in a quarter, definitely early in the year, pressures the CapEx so there are 2 factors there. We don't really breakout a separate LTE spend. But I think consistent with prior discussions, we have said that LTE is less than half of the spend. That does remain true. And then I think your final point was what would we see, from a trajectory standpoint, relating to CapEx. I think that really depends on a variety of factors. How does our growth continue for the balance of this year into next year? We are launching many more Android smartphones in the tail end of the year. So what is the uptake on that as our percentage of gross additions? Even with a higher price for those phones, does it increase substantially over the third? Those are things that can potentially impact us. Roger, do you want to comment a little bit?

There's always between 10% and 20% of our CapEx that's going into upgrading our, let me call it core, which in this case is probably more true this year, as we begin to get the redundancy in our LTE system. We're building out Atlanta as being a second Center for MME and bringing in additional OS systems to control. So I think Braxton's comment is correct, but there's also a pretty significant upgrade in what I would call the core, which we used to call the MSCs. Jonathan Chaplin - Crédit Suisse AG: So with CapEx -- somewhere around half of CapEx being spent on LTE, can CapEx come down to sort of $600 million in 2012? J. Carter: Yes. Again, I think that depends on what the growth rate is going to be and on what development we see in the LTE ecosystem, and there's multiple factors. So we're not really looking forward to '12 at this point giving it to you.

And we'll take our last question from Will Power at Robert Baird. William Power - Robert W. Baird & Co. Incorporated: So I guess kind of following up on the higher net adds and rising usage, can you kind of update us on the network quality statistics, blocked calls, dropped calls? Just as you think about how the network is performing under kind of the higher stress. And then, I guess, the second question, Roger, you had talked about LTE for All. What's the timing for that? Is that more of a 2012 event, and is that really just a function of pushing more LTE handsets as those become available?

Let me take the last question first, I think, then I'll begin it over. The key to the LTE in our minds is developing this what we call ecosystem. You can translate that to infrastructure, but the key is the handsets. And we look to broadening the ability to buy beyond Qualcomm chipsets. There are other parties who are selling chipsets that could provide us the window for early, shall we say, price reduction in handset because we believe that you simply have to, on a wholesale basis, get down to the $200 or below mark before you can begin to make real progress. And I think we see that's certainly going to be a 2012 event, but it's probably going to be a last half 2012 event. So really 2013 it will be a year where we think that LTE will come into its own. So it's a matter of getting it developed in our band, which is critical for us. We wanted to develop it in narrow bands. So all the way down to 1.4 as different than 5x5 and 10x10. And obviously, that gives us an opportunity to utilize it across all of our networks. So I would say that the ecosystem is probably going to be in high gear by the end of 2012. And along the way, were going to do whatever we can to send customers to begin to adopt and embrace LTE as their system of choice. J. Carter: Thank you again for participating on today's call.

We don't give blocks and drops and we haven't. We feel that we're well within our industry guidelines as we have always been. What this has caused us to do though is both compression, conditioning and other features to help us as we have seen this growth. The growth is still young, and many of the tools that we're using to manage this growth and data is under development. So we feel good about it now, but it is something that has really come out of the late 2010. And we feel like we have it under control. J. 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?

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