MetroPCS is gearing up to be 2007's largest IPO to date. The wireless-phone service provider announced intentions to sell 50 million shares for $19 to $21 apiece. If all goes well, the offering will raise roughly $1 billion, higher even than the $600 million that Clearwire's
The company itself will sell 37.5 million shares, in hopes of netting $713.3 million. The rest of the shares will be sold by a long list of existing stockholders, many of them venture funds and individuals.
Like competitor Leap Wireless
MetroPCS offers unlimited-talk plans without requiring customer contracts. These regional plans have proved very popular with wireless users, stealing many customers away from bigger national rivals such as AT&T's
MetroPCS will likely get a warm reception from Wall Street. Leap, which grew revenue 24% last year, has shown that flat-rate pricing strategies translate into high growth. Investors have reacted to Leap's growth with open arms, sending the company's shares up more than 59% in the last year alone.
That said, top-line growth must be met with profitable operations to keep debt from spiraling upward. With $2.6 billion of long-term debt on the books, MetroPCS can't afford to strap on much more debt anytime soon. If it continues to grow operating cash flow as it has, though, it may not have to.
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Fool contributor Dave Mock gets retro in the metro -- the O.C., you know. He owns no shares of companies mentioned here. Vodafone is a Motley Fool Inside Value recommendation. Dave is the author of The Qualcomm Equation. The Fool has a disclosure policy.