* Q2 EPS $0.07 vs est $0.13
* Q2 EBITDA $233.8 mln vs est $247.2 mln
* Q2 net additions falls sequentially; ARPU falls, churn up
* Reiterates outlook for the year
* MetroPCS shares fall 33 pct; Leap falls 18 pct (Recasts; adds CFO comments, details)
By S. John Tilak
BANGALORE, Aug 6 (Reuters) - MetroPCS Communications Inc's PCS.N quarterly profit missed market expectations as increased competition hurt subscriber growth at the low-cost wireless carrier, sending its shares down 33 percent to a record low.
All key metrics for the company were weak, underscoring concerns on Wall Street of rising competition and slowing growth for MetroPCS, which had earlier this year expanded into major new markets such as New York and Boston. Its rivals include Leap Wireless LEAP.O and Sprint-Nextel (S.N) unit Boost Mobile.
Second-quarter average revenue per user (ARPU) at MetroPCS fell to $40.52 and churn rate, a measure of customer attrition, rose to 5.8 percent.
ARPU could dip further in the short term to the high $30s, Chief Executive Roger Linquist said in a conference call.
Last week, MetroPCS had said it would offer additional features on its existing plans.
While the move is expected hurt MetroPCS's ARPU, it would help in meeting the company's outlook, Chief Financial Officer Braxton Carter said in an interview with Reuters.
The company reaffirmed its 2009 net subscriber additions outlook of 1.4 million to 1.7 million.
Churn in the quarter was hurt by a $49 phone offering with free service for the first month. MetroPCS has since increased the cost and now its lowest priced handset is $69.
"We think that by moving to higher priced handsets that people will be more vested in their buying decisions into MetroPCS and that should have a positive impact (on churn)," Carter said.
But historically, the third quarter has a churn level that is equivalent or higher than the second quarter, Carter added.
Quarterly consolidated net subscriber additions were about 206,000, compared with 684,000 in the first quarter.
"The most surprising thing to me this quarter was how weak the net subscribers were even though this was to be their first really big quarter in both New York and Boston," Auriga USA analyst Chandan Sarkar said. "There's tremendous increased competition in the prepaid segment. In particular, Sprint's Boost offering is starting to take significant share from MetroPCS," Sarkar said.
In the economic downturn, the unlimited prepaid segment, where carriers lure users with cheap monthly plans without tying them to contracts, has been growing rapidly.
Once the domain of MetroPCS and rival Leap, national carriers are also increasingly competing for the potential customers in this space.
"AT&T (T.N) and Verizon have done a better job than we expected in terms of defending their existing customers," analyst Sarkar said. Verizon Wireless is a venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L).
MetroPCS reported an 11 percent rise in consolidated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to $233.8 million. Analysts expected EBITDA of $247.2 million, according to Reuters Estimates.
Second-quarter net income fell to $26.2 million, or 7 cents a share, from $50.5 million, or 14 cents a share, a year earlier. Revenue rose 27 percent to $859.6 million. Analysts expected earnings of 13 cents a share, excluding exceptional items, on revenue of $863.6 million.
Shares of MetroPCS, which was recently added to the S&P 500 stock index .SPX, fell as much as 33 percent to an all-time low of $8.45. The stock was the top percentage loser in afternoon trade on the New York Stock Exchange.
Ahead of today's losses, the stock had fallen 30 percent in the last three months. The Dow Jones U.S. Mobile Telecommunications index .DJUSWC had fallen 18 percent in same period.
MetroPCS's results soured investor sentiment for telecom stocks, analysts said.
Sprint shares dropped 3 percent to $3.86. AT&T was down 1 percent at $25.51 and Verizon fell 1 percent to $30.83.
Shares of Leap, which is due to report later on Thursday, fell 16 percent to $19.83. (Additional reporting by Sinead Carew in New York; Editing by Anil D'Silva and Aradhana Aravindan)