Notes from the PCS analyst meeting....as always they tend to be a little disorganised, so I hope I got all of the numbers correct.
Just some general impressions...PCS continually emphasized the capacity of their CDMA network. They plan on moving to 1xrtt during 2001, 1XEV-DO (HDR 2.4Mbps) during 2002, and 1XEV-DV (3-5Mbps) during 2003. They also emphasized the need for applications. As one member of management put it.....
What are we going to do with all this capacity?
Applications, applications, applications.
They plan on having location-based services running sometime next year along with the beginning of advertising on handsets. The adoption of handsets with color LCD's is expected "pretty soon". JMO....PCS is leading the industry in innovation and will soon have the capacity to really drive data intensive applications. The TDMA operators are in trouble...and most of the other CDMA operators (Verizon and Alltel) have too many analog subs to really take advantage of their capacity advantages.
I believe that the reason the stock fell is that PCS announced that they will be doing a $3B equity offering during sometime in 2001. Also, they gave guidance for $1.6B in EBITDA for 2001 vs the analyst estimates of around $2B.
On to the good stuff.....
- 25% of gross adds during the 3Q were business users.
- Data subs are expected to increase geometrically. Over 1m users are expected by the end of the year. It looks to me like they are about to hit a critical mass that is needed to attract application development.
- Over 400 MOU/Month during the 3Q. Rev's up 104%. 750,000 data users....
- They need spectrum in just a "handful" of cities. They believe they are well positioned with their current spectrum along with the occasional spectrum swap. They will participate in the spectrum auctions but only on a limited basis.
- They now have around 25 games vs. 0 a month ago. They believe that this will help drive the teen-age market (same pattern as in Korea/Japan). Yesterday 10,000 users played Gladiator with an average game time of 6 minutes. I've played it....pretty cool. The games will get more interesting/complex with the advent of color LCD's.
- 1,000,000 MOU of AOL IM during the first two weeks of launch. Something like 80% of teens who have computers use IM.
- They mentioned business applications multiple times....particuarly Siebel.
- With IS-95A they saw a 5-7x capacity advantage over AMPS....3x GSM and TDMA.
- An example of the amount of capacity they have is NYC. They saw a 105% increase in MOU in NY during the last year, but only a 25% increase in spectrum usage. The busiest place (in terms of handset usage) in NYC is JFK airport....however they expect to only have to use 17.5MHz to handle JFK in 2003.
- The upgrade path allowed by CDMA will involve changing out channel cards vs the "fork-lift" upgrades that competitors will require.
- Capital Expenditures for next year will be $3.5B. $350-400m for 1xrtt upgrades....$700m for expansion....$900m for applications/back office development. The last category includes position location services, improvements in billing systems, and new wireless web services.
- Vendors are telling them to expect a 50% improvement in stand-by times with 3G (1xrtt) handsets.
- Capacity improvements are going to be huge. Using the current IS-95A capacity as a baseline of 1.
IS-95A 1
EVRC ~1.4x
1xrtt 3x
Smart Antennas 5.8x
Selectable Rate Vocoder 8x
They expect to have 8x the current capacity over the next 4 years. They made the comparision to DWDM.
- They have turned EVRC (variable rate vocoder) on in 85% of their markets, they expect complete to the roll-out in the 2Q '01.
- The 1x roll-out will begin during 2001 and be completed during the 2Q '02. They expect to spend about $800m on the roll-out with half of that money coming next year.
- They currently have 13,700 cell-sites covering 182m POP's. They will have around 18,000 cell sites at the end of '01. In addition their affiliates currently cover 31m POP's.....totals about 75% of the population. Currently roaming is less than 5% of MOU....
- Customer care is becoming more automated. They are adding features to there website to allow customers to handle things on their own. Also, when you dial in for customer care, they ask for your phone number. You are then grouped into the type of customer you are. High-use customers take an average of 10 seconds to have their phone answered....
Some stuff I didnt like....They still didnt give any concrete guidance on net-adds for the fourth quarter. They stuck with 18-22% of total US adds. The decline in EBITDA was never adequately explained. They mentioned customer care costs, but sort of hinted that they were being conservative. They should have been conservative two months ago!
Hmmm....I think I am just about typed out.
Slacker |
