US regional operators MetroPCS and Leap Wireless both saw customer growth contract in the third quarter as growing competition in the low-end prepaid space continued to impact their businesses, reports Wall Street Journal. MetroPCS reported strong earnings and revenue growth for the quarter but added only 66,000 customers, nearly half of what Wall Street expected and down 73 percent from a year ago. Customer churn increased to 5.8 percent from 4.8 percent a year ago. The Dallas-based operator subsequently cut its estimates for full-year subscriber growth by 450,000 to a range of 1 million to 1.2 million. Meanwhile, Leap added 116,182 new customers in the quarter, a decline of 25 percent from a year ago, and was forced to cut its full-year estimate for new customers to 1.1 million to 1.3 million, from a prior forecast of 1.5 million. It also reported a widening loss of US$65.4 million, compared with a year-ago loss of US$47.3 million.

Competition in the US prepaid market has intensified this year following the introduction of unlimited mobile plans on a prepaid (non-contract) basis, pioneered by Sprint’s Boost Mobile US$50 monthly plan in January. The strategy has been replicated by a number of its prepaid rivals (including MetroPCS and Leap Wireless) and has led to a fierce price war in the prepaid low-end segment. The situation has reignited long-standing speculation that MetroPCS and Leap could merge. A combination of the two regional operators – which already have a roaming agreement in place – would create an operator with almost 11 million connections and near-nationwide coverage. However, an earlier attempt to merge the two operators in 2007 failed after Leap rejected a buyout proposal from MetroPCS. Leap has more recently been linked with a possible takeover by AT&T.