June 24, 2009 / 8:03 PM / 10 years ago

MetroPCS to offer unlimited international calls at $5/month

BANGALORE/NEW YORK (Reuters) - MetroPCS Communications Inc PCS.N on Wednesday unveiled a discounted international calling service, its latest effort to appeal to cost conscious U.S. consumers.

The low-cost wireless carrier, which recently entered large U.S. northeast markets such as New York and Boston, said its $5 a month unlimited service for calls to 100 countries could be added to its $40, $45 and $50 unlimited domestic plans.

In comparison, calling Canada for just over 10 minutes from a Verizon Wireless phone would cost the same as MetroPCS unlimited $5 monthly fee, unless there are some hidden fees that MetroPCS has not disclosed.

Analysts saw the MetroPCS move as evidence of intensifying competition in voice call fees in the U.S. market.

“Pricing is coming down a lot in wireless, especially in the voice side,” Auriga USA analyst Chandan Sarkar said. “This is yet another indication of that.”

The MetroPCS website showed that the offer was available to countries such as Canada and United Kingdom but MetroPCS officials were not immediately available to give more details.

It was not immediately clear if the offer would incite rivals such as AT&T Inc (T.N), Verizon Wireless or Boost Mobile, a unit of Sprint Nextel (S.N) to make any fee changes.

Verizon Wireless spokesperson Brenda Raney declined to comment on whether the venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L) would react to the MetroPCS offer, but she noted that consumers also consider carriers’ domestic service coverage when choosing a carrier.

“What you also have to do is take into consideration that you’re buying more than just international,” she said.

Boost, a key competitor to MetroPCS in domestic unlimited calling service, said that it does not feel the need to match the MetroPCS rate. Boost charges per minute international call fees with the cheapest rates for Mexico and Puerto Rico.

Other operators pointed to what they saw as limitations to the MetroPCS plan. AT&T charges a per minute calling fee for its international calls and in order to avail of its cheapest fees customers must pay a $3.99 monthly fee but noted that it offers services to 220 countries compared to the 100 countries covered by the MetroPCS plan.

“There are significant limitations to the Metro PCS offer,” AT&T spokesman Mark Siegel said.

Soleil/Nelson Alpha Research analyst Michael Nelson said that MetroPCS is likely using Internet technology in order to bring its prices down.

“They have to be routed over the Internet to get rates that low,” Nelson said. “It’s kind of interesting how they’re able to do that.”

MetroPCS and rivals, including Leap Wireless International Inc LEAP.O and Boost Mobile, often target people with relatively lower earnings power by offering unlimited calls at flat monthly rates without tying customers to contracts.

With prolonged weakness in the economy, such services have seen a rise in demand. On Monday, Standard & Poor's announced that MetroPCS would join its flagship S&P 500 stock index .SPX after the close of trading on June 29.

MetroPCS shares were trading up 2.1 percent at $14.63 Wednesday on the New York Stock Exchange.

Editing by Anne Pallivathuckal, Bernard Orr

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