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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-K/A

(Amendment No. 1)



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2003



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission File No. 333-111470



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MetroPCS, Inc.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 75-2550006                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                              |  |           
|--------------------------------------------- |  | ----------
|8144 Walnut Hill Lane Suite 800 Dallas, Texas |  | 75231     
|(Address of principal executive offices)      |  | (Zip code)



Registrants
telephone number, including area code: (214) 265-2550



Securities registered pursuant to Section 12(b) of the Act:

None



Securities registered pursuant to Section 12(g) of the Act:

None



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ̈No x



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ̈No x



The aggregate market value of voting stock held by non-affiliates of the registrant is not determinable as such shares were privately placed and there is no public market for such shares.



85,106,870 shares of the registrants common stock were
outstanding as of May 31, 2004.



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EXPLANATORY NOTE



We are filing this Form 10-K/A to conform the disclosure herein to certain disclosure set forth in Amendment No. 5 to
Form S-1 filed by MetroPCS Communications, Inc. Other than as set forth in this Amendment No. 1, no information included in the initial Form 10-K has been amended by this Form 10-K/A. This Form 10-K/A continues to speak as of the date that the
initial Form 10-K was filed with the SEC, and we have not updated the disclosure herein to reflect any information or events subsequent to the filing of the initial Form 10-K.



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MetroPCS, INC.

Index to Form 10-K



|           |  |                                                                                                |  |   
|---------- |  | ---------------------------------------------------------------------------------------------- |  | --
|PART I     |  | 2                                                                                             
|           |  |                                                                                               
|Item 1.    |  | Business                                                                                       |  | 2 
|           |  |                                                                                               
|Item 6.    |  | Selected Financial Data                                                                        |  | 17
|           |  |                                                                                               
|Item 7.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations          |  | 19
|           |  |                                                                                               
|Item 9A.   |  | Controls and Procedures                                                                        |  | 32
|           |  |                                                                                               
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 35
|           |  |                                                                                               
|Item 15.   |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                |  | 39
|           | 
|SIGNATURES |  | 41                                                                                            



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CAUTIONARY STATEMENT

REGARDING FORWARD-LOOKING STATEMENTS



This annual report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements are subject to risks and
uncertainties. You should not place undue reliance on these statements. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business strategies. These statements
often include words such as anticipate, expect, plan, intend and similar expressions. We base these statements on assumptions that we have made in light of our experience in the industry, as well as
our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. As you read and consider this annual report, you should understand that these statements are
not guarantees of performance or results. They involve risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual
financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements.



All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by
our cautionary statements. We do not intend to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events, except as required by law.



PART I



Item 1.Business



General



We are
among the fastest growing wireless communications providers in the United States, measured by annual percentage growth in customers and revenue. We offer wireless services on a no-contract, flat rate, unlimited usage basis in the San Francisco,
Miami, Atlanta and Sacramento metropolitan areas, which include a total population of 22.6 million people. We launched service in all these areas in the first quarter of 2002, except for San Francisco, which we launched in September 2002. We
reported positive net income and adjusted EBITDA after four quarters of operations and one million customers after eight quarters of operations. We believe that we reached these growth and profitability milestones significantly faster than any other
U.S. wireless carrier and that our no-contract flat rate, unlimited usage service offering will allow us to continue to penetrate our existing markets and further drive our growth in profitability. In addition, we believe our services can be
successfully introduced in new markets, and we continue to assess attractive expansion opportunities.



We provide wireless voice and data services to the mass market, which we believe is underserved by traditional wireless carriers. We operate principally
through two subsidiaries and hold PCS licenses in 15 subsidiaries. Our service, branded under the metroPCS name, allows our customers to place unlimited wireless calls within a local calling area and to receive unlimited calls from
any area for a simple and affordable flat monthly rate plan of $35. For an additional $5 per month, our customers may place unlimited long distance calls from within a local calling area to any number in the continental United States. For additional
fees, we also provide caller ID, voicemail, text messaging, camera functions, downloads of ringtones, games and content applications, international long distance and other value-added services. Our calling plans differentiate us from the more
complex plans and long-term contracts required by other wireless carriers. Our customers pay for our service in advance, eliminating any customer credit exposure, and we do not require a long-term service contract. As of December 31, 2003, our
customers averaged approximately 1,700 minutes of use per month, compared to approximately 655 minutes per month for customers of traditional wireless carriers. We believe that average monthly usage by our customers also exceeds the average monthly
usage for typical wireline customers.



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Average usage by our customers indicates that a majority of our customers use us as their primary telecommunications
service provider, and our customer survey results indicate that approximately 35% of our customers use us as their sole telecommunications service provider.



Business Strategy



We believe the following components of our business strategy will allow us to continue our rapid, profitable growth:



Continue to Target UnderservedCustomer Segments in our
Markets. We believe there is substantial demand in the United States for our affordable wireless services, as demonstrated by the fact that we have been among the leaders of the U.S. wireless industry in incremental market penetration in every
quarter since we launched operations. Historically, approximately 40% of our gross customer additions have been first time wireless customers, while the remainder have switched from traditional wireless carriers. We believe our rapid adoption rates
and customer mix demonstrate that our service is expanding the overall size of the wireless market as well as better meeting the needs of many existing wireless users.



Offer Affordable, Fixed Price Calling Plans Without Long-Term Service Contracts. We believe that our fixed
price, unlimited service represents an attractive offering to a large segment of the population. Our service results in average per minute usage costs to our customers that are significantly lower than the average per minute rates of other wireless
operators. We believe that many prospective customers refrain from subscribing to or extensively using traditional wireless communications services due to high prices or unattractive and confusing calling plans, and that our simple, cost-effective
service will allow us to attract many of these customers and continue our rapid growth.



Maintain Our Position as the Lowest Cost Wireless Telephone Services Provider in the United States. We are the lowest cost provider of
wireless services in the United States, which allows us to offer our services at affordable prices while maintaining cash profit margins per customer that are among the highest in the industry. Our operating strategy, network design, spectrum
portfolio and rapidly increasing scale, together with the population density of our markets, should allow us to continue to maintain our cost leadership position and further reduce our per customer operating costs in the future.



Expand into Attractive Markets Through Acquisitions and
Spectrum Swaps. We believe the success of our business model can be replicated in markets outside of our existing footprint. We expect that attractive expansion opportunities will become available. We plan to target expansion markets that
complement our existing footprint or can be operated as a stand alone cluster with growth and profitability characteristics similar to our existing markets. We may choose to swap a portion of our existing excess spectrum for spectrum in new markets.



Competitive Strengths



We believe our business has many competitive strengths that distinguish us
from other wireless carriers and will allow us to successfully execute our business strategy, including:



Our Flat Rate. We believe our service offering that provides unlimited usage from within a local calling area represents a compelling value
proposition for our customers that differs substantially from the offerings of traditional wireless and wireline carriers. Our service is designed to provide mobile functionality while eliminating the gap between traditional wireless and wireline
pricing, which we believe stimulates usage of our wireless service and will contribute to driving wireless adoption in our markets to levels comparable to the adoption rates currently experienced in Europe. We also believe that our ability to
capture over one million customers as of December 31, 2003, demonstrates the substantial demand for our service offering.



Our Focus on Densely Populated Markets. Our current service areas include four of the 25 most populous metropolitan areas in the United States: San
Francisco, Miami, Atlanta and Sacramento. We believe the high relative population density of our market clusters results in increased efficiencies in network deployment,



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operating costs and product distribution. As of December 31, 2003, our markets had an average population density of 335 POPs per square mile, over four times
the national average. In addition, the population of our markets is growing at an average of 1.5 times faster than the national average and the average household income in our markets is $5,000 above the national average according to the Paul Kagan
Associates, Inc. Wireless Telecom Atlas & Databook 2002. Based on these statistics, we believe our market profile is the most attractive profile of any U.S. wireless carrier. We believe significant opportunities exist to expand into other
markets with similar characteristics.



Our Cost
Leadership Position. We believe our operating strategy, network design, population density and spectrum position have enabled us to become the lowest cost provider of wireless services in the United States. We also believe our rapidly increasing
scale will allow us to continue to drive our per customer operating costs down in the future. For the three months ended December 31, 2003, our cost per gross addition, or CPGA, was $87.11 compared to an average CPGA of $394 for our three largest
national competitors. In addition, our operating costs per customer are substantially below the service costs of our national competitors. We believe our industry leading cost position provides us with a sustainable competitive advantage in our
markets and will allow us to continue our rapid, profitable growth.



Our State-of-the-Art CDMA 1XRTT Network. We have deployed a 100% code division multiple access radio transmission technology, or CDMA 1XRTT, network in each of our markets that is designed specifically to
provide the capacity necessary to satisfy the usage requirements of our customers. CDMA 1XRTT technology provides substantially more voice and data capacity than other commonly deployed wireless technologies and provides us with a network capacity
advantage in our markets. Our CDMA 1XRTT network, which provides the most efficient use of spectrum, currently allows us to rapidly and cost-effectively add network capacity without adding incremental cell sites. We believe that the combination of
our network technology, network design and spectrum depth will allow us to efficiently serve the high usage demands of our rapidly growing customer base into the future.



Our Deep Spectrum Portfolio. As of December 31, 2003, we held 30 MHz of spectrum in 13 of the 14 license areas
even though our business plan generally requires only 20 MHz of spectrum in our major markets. This excess spectrum provides us with the flexibility to swap or sell 10 MHz or more of spectrum in selected markets to support future expansion or
investment initiatives without materially impacting our business plan. For example, in February 2002, we completed our only spectrum sale to date, selling 10 MHz of excess spectrum in our Atlanta market for $290.0 million.



Company History



We were formed in 1994 for the purpose of acquiring and operating PCS licenses as a small business under the
FCCs designated entity rules. In 1996, we participated in the FCCs C-Block auctions of PCS spectrum licenses. Although the auctions in which we were declared the high bidder concluded in May 1996, the FCC did not issue the
licenses to us until January 1997, by which time the market value of PCS licenses had declined dramatically due to, among other things, the FCCs intervening auction of licenses in the D-, E- and F-Blocks. In connection with the C-Block
auction, each of our license-holding subsidiaries had executed a separate promissory note payable to the FCC in an amount equal to the purchase price of that subsidiarys FCC license. As a result, we were unable to obtain the financing
necessary to service our debt to the FCC and build our networks.



In October 1997, after repeated efforts to obtain a commercially viable restructuring of our debt to the FCC, the subsidiaries in which we hold our FCC licenses each filed voluntary petitions for relief under Chapter 11 of the United States
Bankruptcy Code. In January 1998, we filed our own voluntary Chapter 11 petition, joining our license subsidiaries bankruptcy proceedings.



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As a result of proceedings commenced in the bankruptcy court, it was determined that, after crediting the
$106.0 million we had paid to the FCC as down payments for our licenses, the total amount owed by us to the FCC was $60.0 million. In September 1998, the bankruptcy court confirmed our plan of reorganization and we emerged from bankruptcy in October
1998.



Products and Services



Voice Services. We provide affordable, reliable and high-quality
wireless communications services, which consists of two primary pricing plans. Our basic $35 per month service offering allows our customers to place unlimited calls within our calling area and to receive unlimited calls from anywhere in the world.
In November 2003, we began to market a $40 per month service offering in all of our markets that allows our customers to place unlimited calls, from our coverage area, to anywhere in the continental United States, and to receive unlimited calls from
anywhere in the world. Both plans are paid for in advance and do not require a long-term service contract. Our calling areas extend in most cases beyond the boundaries of our actual license footprint. For example, customers in our San Francisco and
Sacramento markets may place unlimited calls to areas throughout northern California for which our wireline competitors generally would impose toll charges.



Customers on our basic $35 per month plan desiring long distance and international calling service may choose a pre-paid
option allowing them to place calls anywhere in the world at favorable rates. Customers on our $40 per month plan who desire international calling service may also choose this pre-paid option for international calling service. Customers who travel
outside of their coverage area may roam onto other wireless networks by providing the carrier on those networks with a credit card number, thereby allowing that carrier to bill them directly for their roaming charges. We incur no costs, nor do we
receive any revenues, when our customers utilize these third-party roaming services.



Data Services. Our data services include:



| |  | services provided through the binary runtime environment for wireless, or BREW, development platform, including ringtones, games and content applications;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | text messaging services, which allow the customer to send and receive alphanumeric messages, which can be received, stored and displayed on the handset on demand; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | multimedia messaging services, which allow the customer to send and receive messages containing photographs.
| | - | ------------------------------------------------------------------------------------------------------------



Custom Calling Features. We offer other custom calling features,
including caller ID, call waiting, three-way calling, distinctive ring tones and voicemail.



Advanced Handsets. We sell a variety of handsets manufactured primarily by Nokia, Kyocera, Audiovox, LG and Sony Ericsson for use on our network,
including models that provide color screens, camera phones and other features to facilitate digital data transmission. All of the handsets we offer are CDMA 1XRTT compliant.



We continue to evaluate new product and service offerings in order to enhance customer satisfaction and attract new
customers. For example, in March 2004, we launched, on a trial basis, a limited usage offering in which customers purchase 250 minutes of local and long distance usage per month for $25 instead of our traditional unlimited usage offerings. We
believe that this offering will help us to retain existing customers and attract new customers who do not require unlimited usage or who are unwilling or unable to pay for our traditional unlimited usage plans.



FCC Licenses



As of December 31, 2003, each of our 14 wholly owned license subsidiaries held one 30 MHz PCS license, with the
exception of one of our subsidiaries that held a license for 20 MHz as a result of the February 2002 sale



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of 10 MHz of spectrum in our Atlanta market. Six licenses permit wireless operations in the greater San Francisco and Sacramento metropolitan clusters, five
permit wireless operations in the Miami metropolitan cluster, and three permit wireless operations in the Atlanta metropolitan cluster. The licenses have an initial term of ten years after the initial grant date (January 1997), and, subject to
applicable conditions, may be renewed thereafter. Each FCC license is essential to our ability to operate and conduct our business in the area covered by that license. See Legislation and Government Regulations.



On November 26, 2003, we entered into an agreement to acquire four additional
15 MHz PCS licenses to expand our Sacramento market, pending FCC approval.



Markets



Our FCC licenses cover four clusters
encompassing the greater metropolitan areas of San Francisco, Miami, Atlanta and Sacramento. We believe our markets are particularly attractive because of their high population densities, high historical and projected population growth rates,
favorable business climates and long commuting times relative to national averages. The population of our markets is growing and is expected to continue to grow at an average of 1.5 times faster than the national average for the period of 2001
through 2006.



The following table sets forth information
regarding our licensed markets as of December 31, 2003:



|                               |  |                |  |               |  |                                            |   |  |                      
|------------------------------ |  | -------------- |  | ------------- |  | ------------------------------------------ | - |  | ---------------------
|                               |  | 2002 POPs(1)   |  | MHz in Market |  | 2001-2006 Annual Population Growth Rate(1) |   |  | Population Density(2)
|                               |  | (In thousands)
|San Francisco Cluster:         |  |                |  |               |  |                                            |   |  |                      
|San FranciscoOaklandSan Jose |  | 7,375.9        |  | 30            |  | 1.05                                       | % |  | 544                  
|SalinasMonterey               |  | 410.1          |  | 30            |  | 1.03                                       | % |  | 124                  
|                               |  |                |  |               |  |                                            |   |  |                      
|Subtotals/Average              |  | 7,786.0        |  |               |  | 1.05                                       | % |  | 462                  
|Miami Cluster:                 |  |                |  |               |  |                                            |   |  |                      
|MiamiFort Lauderdale          |  | 4,073.0        |  | 30            |  | 1.62                                       | % |  | 970                  
|West Palm Beach                |  | 1,213.6        |  | 30            |  | 2.02                                       | % |  | 439                  
|Fort Myers                     |  | 654.7          |  | 30            |  | 2.04                                       | % |  | 191                  
|Fort PierceVero Beach         |  | 447.9          |  | 30            |  | 1.86                                       | % |  | 274                  
|Naples                         |  | 268.1          |  | 30            |  | 3.01                                       | % |  | 134                  
|                               |  |                |  |               |  |                                            |   |  |                      
|Subtotals/Average              |  | 6,657.3        |  |               |  | 1.81                                       | % |  | 475                  
|Atlanta Cluster:               |  |                |  |               |  |                                            |   |  |                      
|Atlanta                        |  | 4,612.8        |  | 20            |  | 2.31                                       | % |  | 420                  
|Gainesville                    |  | 259.4          |  | 30            |  | 2.53                                       | % |  | 159                  
|Athens                         |  | 214.7          |  | 30            |  | 1.85                                       | % |  | 156                  
|                               |  |                |  |               |  |                                            |   |  |                      
|Subtotals/Average              |  | 5,086.9        |  |               |  | 2.30                                       | % |  | 364                  
|Sacramento Cluster:            |  |                |  |               |  |                                            |   |  |                      
|Sacramento                     |  | 2,059.0        |  | 30            |  | 1.45                                       | % |  | 129                  
|Stockton                       |  | 619.6          |  | 30            |  | 1.31                                       | % |  | 254                  
|ChicoOroville                 |  | 233.4          |  | 30            |  | 0.96                                       | % |  | 79                   
|Yuba CityMarysville           |  | 141.9          |  | 30            |  | 1.09                                       | % |  | 114                  
|                               |  |                |  |               |  |                                            |   |  |                      
|Subtotals/Average              |  | 3,053.9        |  |               |  | 1.37                                       | % |  | 135                  
|Totals/Average                 |  | 22,584.1       |  |               |  | 1.60                                       | % |  | 335                  
|U.S. Totals/Average            |  | 291,248.0      |  |               |  | 1.06                                       | % |  | 82                   

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|(1) | Source: Paul Kagan Associates, Inc. Wireless Telecom Atlas & Databook 2002.
|--- | ---------------------------------------------------------------------------

|(2) | Number of POPs per square mile as of December 31, 2001.
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Distribution and Marketing



We offer our wireless services under the metroPCS brand both through indirect independent retail outlets and
directly to our customers through company-operated retail stores. At December 31, 2003, our distribution outlets included approximately 1,000 indirect retailers and 44 MetroPCS retail locations. Our indirect distribution outlets include a range of
local, regional and national mass market retailers and specialty stores. For 2003, approximately 76% of our gross customer additions were added through our indirect distribution outlets. We believe our mix of indirect and direct distribution
provides us with the ability to reach the largest number of potential customers in our markets at a low relative cost. We plan to increase our number of indirect distribution outlets and company-operated stores.



We engage in local advertising in order to develop our brand and support our
indirect and direct distribution channels. We primarily advertise through radio, cable and local print media. In addition, we believe we have benefited from a significant number of word-of-mouth customer referrals.



Customer Care, Billing and Support Systems



Our strategy of establishing and maintaining our leadership position as a
low cost provider, while ensuring high customer satisfaction levels, has led us to pursue several outsourcing solutions to efficiently deliver quality service and support to our customers. We outsource some or all of the following back office and
support functions to nationally recognized third-party providers:



| |  | Customer Care. Our call centers are staffed with professional and bilingual customer service personnel, who are available to assist our customers 24 hours a day, 365 days a
year. We also provide automated voice response services to assist our customers with routine information requests. We believe providing quality customer service is an important element in overall customer satisfaction.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Billing. We utilize a third party billing platform that enables us to bill and monitor payments from our customers. We offer our customers the option of receiving web-based
and short messaging service-based bills as well as traditional paper bills through the mail. We believe our current billing arrangement will provide us with sufficient scale as our business continues to grow.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Payment Processing. Customers may pay by credit card, debit card, check or cash. We have over 1,000 locations where our customers who chose to pay cash for their monthly
service can make their payments. Many of these locations also serve as distribution points for our services and are therefore conveniently located for our customers to make payments. In addition, customers may make payments at any of the more than
3,000 Western Union locations throughout our markets.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Logistics. We outsource the logistics associated with the shipping of handsets to our distribution channels.
| | - | ------------------------------------------------------------------------------------------------------------



Network Operations



We believe we were the first U.S. wireless carrier to have 100% of our customers on a CDMA 1XRTT network. We began to
build out our network in 2001, shortly after other CDMA carriers began to upgrade their networks to 1XRTT. As a result, we were able to deploy our network with third generation capabilities at a fraction of the cost that was incurred by other
carriers to deploy second generation CDMA networks. All of our handsets are CDMA 1XRTT compliant and as a result we receive the full capacity and quality benefits that CDMA 1XRTT provides across our entire network and customer base.



As of December 31, 2003, our network consisted of seven switches at five
switching centers and 955 cell sites in operation. A switching center serves several purposes, including routing calls, managing call handoffs, managing access to the public telephone network and providing access to voicemail and other value-added
services. Currently, all of our cell sites are co-located, meaning our equipment is located on leased facilities that



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are owned by third parties who retain the right to lease these facilities to other carriers as well. We utilize our switching centers capabilities for
around-the-clock monitoring of our network base stations and switches.



Our switches connect to the public telephone network through fiber rings, which facilitate the first leg of origination and termination of traffic between our equipment and both local exchange and long distance carriers. We have negotiated
interconnection agreements with our local exchange carriers.



We use third-party providers for long distance services and for backhaul services. Backhaul services are the telecommunications services that other carriers provide to carry our traffic from our cell sites to our switching facilities.



Network Technology



Wireless digital signal transmission is accomplished through the use of
various forms of frequency management technology or air interface protocols. The FCC has not mandated a universal air interface protocol for wireless PCS systems. Rather, wireless PCS systems operate under one of three principal air
interface protocols: code division multiple access, or CDMA; time division multiple access, or TDMA; or global system for mobile communications, or GSM. TDMA and GSM communications are both time division multiple access systems but are incompatible
with each other. CDMA is incompatible with both GSM and TDMA systems. Accordingly, a customer of a system that utilizes CDMA technology is unable to use a CDMA handset when traveling in an area not served by a CDMA-based wireless carrier, unless the
customer carries a dual- band/dual-mode handset that permits the customer to use the analog cellular system in that area. The same issue applies to users of TDMA or GSM systems.



Our decision to use CDMA was based on several key advantages relative to other digital protocols, including the following:



Higher network capacity. Cellular technology
capitalizes on frequency reuse per cell site. CDMA has a reuse of one, meaning that every frequency channel can be used in each cell. TDMA and GSM have a frequency reuse of greater than one, meaning that every frequency channel cannot be reused in a
cell. Therefore, CDMA uses the entire frequency in each cell rather than using only a fraction of such frequency as is typically the case with TDMA and GSM technologies. We believe, based on studies by CDMA handset manufacturers, that our
implementation of CDMA digital technology will eventually provide system capacity that is approximately seven to ten times greater than that of analog technology and approximately three times greater than that of TDMA and GSM systems, resulting in
significant operating and cost efficiencies. Additionally, we believe that CDMA technology provides network capacity and call quality that are superior to that of other wireless technologies.



Longer handset battery life. TDMA and GSM system power control is less
stringent by design than CDMA, whereas the power regulating nature of CDMA establishes a communication link with a customer handset at the lowest possible power level suitable for high-quality voice transmission. As a result, while a digital handset
using any of the three technologies has a substantially longer battery life than an analog cellular handset, battery life in CDMA handsets can be proportionately extended to provide longer periods between recharges.



Fewer dropped calls. CDMA systems transfer calls throughout the CDMA
network using a technique referred to as a soft hand-off, which connects a mobile customers call with a new base station while maintaining a connection with the base station currently in use. CDMA networks monitor the quality of the
transmission received by multiple base stations simultaneously to select a better transmission path and to ensure that the network does not disconnect the call in one cell unless replaced by a stronger signal from another base station. Analog, TDMA
and GSM networks use a hard hand-off and disconnect the call from the current base station as it connects with a new one without any simultaneous connection to both base stations. This characteristic of CDMA results in fewer dropped calls compared
to other technologies.



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Simplified frequency planning. Frequency planning is the process by which wireless service
providers analyze and test alternative patterns of frequency use within their systems to minimize interference and maximize capacity. Currently, TDMA and GSM service providers spend considerable time and money on frequency planning because of the
need to reuse frequencies to maximize capacity throughout a network. With CDMA technology, however, the same subset of allocated frequencies can be reused in every cell, substantially reducing the need for costly frequency planning.



Efficient migration path. CDMA 1XRTT technology can be further
upgraded, easily and cost effectively, for enhanced voice and data capabilities. The relatively low incremental investment in each step along the migration path is an advantage of this technology. Additional steps can be taken as demand for more
robust data services or need for additional capacity develops at relatively modest capital investment levels. Handset compatibility is a primary objective of CDMA 2000, 1XRTT, IS-95A and IS-95B. Therefore, our 1XRTT system supports IS-95A, IS-95B
and 1XRTT handsets.



Privacy and security. CDMA uses
coding to isolate users, whereas TDMA and GSM use time slots to isolate the users. Furthermore, CDMA uses a very long code extending over multiple days, which requires accurate time and code phase knowledge to decode. Therefore, CDMA offers
increased privacy and security.



Competition



We compete directly in each of our markets with other wireless providers
and with wireline providers as a mobile alternative to traditional landline service. We believe that competition for subscribers among wireless communications providers is based primarily upon price, service area, services and features offered, call
quality and customer service. Many of our competitors have substantially greater resources and larger market share than we have, which may affect our ability to compete successfully. Additionally, many of our competitors offer larger coverage areas
or nationwide calling plans that do not require additional charges for roaming, and the competitive pressures of the wireless communications industry have caused other carriers to offer service plans with increasingly large bundles of minutes of use
at increasingly low prices. These competitive plans could adversely affect our ability to maintain our pricing, market penetration and customer retention. Furthermore, the FCC may pursue policies designed to make available additional spectrum for
the provision of wireless services in each of our markets, which may increase the number of wireless competitors we face and enhance the ability of our wireless competitors to offer additional plans and services.



We also compete with companies that use other communications technologies,
including paging and digital two-way paging, enhanced specialized mobile radio and domestic and global mobile satellite service. These technologies may have advantages over the technology we use and may ultimately be more attractive to customers. We
may compete in the future with companies that offer new technologies and market other services that we do not offer. Some of our competitors do or may offer these other services together with their wireless communications service, which may make
their services more attractive to customers. In addition, energy companies, utility companies and cable operators are expanding their services to offer communications services.



Employees



As of December 31, 2003, we had 758 employees. We believe that our relationship with our employees is good. None of our employees is represented by an
employee union.



LEGISLATION AND GOVERNMENT REGULATIONS



The wireless communications industry is subject to extensive
governmental regulation on the federal level and to varying degrees on the state level. The enactment of the Telecommunications Act of 1996 has had an effect on many aspects of this regulation. In addition, this regulation currently is the subject
of administrative rulemakings and judicial proceedings that are significant to us.



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Federal Regulation



The licensing, construction, modification, operation, ownership, sale and interconnection arrangements of wireless communications systems are subject
to regulations and policies adopted by the FCC under the Communications Act of 1934, as amended, or the Communications Act. These regulations and policies govern, among other things, applications for licenses to construct and operate wireless
communications systems, ownership of wireless licenses and the transfer of control or assignment of such licenses, and the ongoing technical and operational requirements under which wireless licensees must operate.



General Licensing Requirements



The FCC awarded PCS licenses for protected geographic service areas called
major trading areas, or MTAs, and basic trading areas, or BTAs, which are defined by Rand McNally & Company. Under this scheme, the United States and its possessions and territories are divided into 493 BTAs, all of which are included within 51
MTAs. The FCC has allocated 120 MHz of radio spectrum in the 1.9 GHz band for licensed broadband PCS. The FCC divided the 120 MHz of spectrum into two 30 MHz blocks, known as the A and B blocks, licensed for each of the 51 MTAs, one 30 MHz block,
known as the C block, licensed for each of the 493 BTAs, and three 10 MHz blocks, known as the D, E and F blocks, licensed for each of the 493 BTAs, for a total of more than 2,000 licenses. Each PCS license authorizes operation on one of six
frequency blocks allocated for broadband PCS.



The FCC has
adopted construction benchmarks for PCS licenses. All 30 MHz broadband PCS licensees must construct facilities that offer coverage to one-third of the population of their service area within five years, and two-thirds of the population within ten
years, of their initial license grants. All 10 MHz and 15 MHz block licensees must provide service to 25% of the service area within five years of their initial license grants, or make a showing of substantial service. While the FCC has granted
limited extensions and waivers of these requirements, licensees that fail to meet the coverage requirements may be subject to forfeiture of the license. We have satisfied the initial five-year construction requirements for all of the PCS licenses we
currently hold.



The FCC generally grants PCS licenses for
terms of ten years that are renewable upon application to the FCC. Near the conclusion of the license term, we must file applications for renewal of licenses to obtain authority to operate for an additional ten-year term. The FCC may revoke our
licenses and may deny our license renewal applications for cause after appropriate notice and hearing. The FCC will award a renewal expectancy to us if we meet specific standards of past performance. If we receive a renewal expectancy, it is very
likely that the FCC will renew our existing PCS licenses so that they will not become subject to competing applications. The FCC has not yet issued any renewal expectancies for PCS licensees, and has clarified only the basic requirements and
process. To receive a renewal expectancy, we must show that we have provided substantial service during our past license term, and have substantially complied with applicable FCC rules and policies and the Communications Act. The FCC defines
substantial service as service which is sound, favorable and substantially above a level of mediocre service that might only minimally warrant renewal. If a licensee does not receive a renewal expectancy, then the FCC will accept competing
applications for the license renewal period, subject to a comparative hearing, and the FCC may award the license for the subsequent term to another entity.



The FCC may deny applications for FCC authority, and in extreme cases revoke FCC licenses, if it finds that an entity lacks the requisite character
qualifications to be a licensee. In making this determination, the FCC considers whether an applicant or licensee has been the subject of adverse findings in a judicial or administrative proceeding involving felonies, the possession or sale of
unlawful drugs, fraud, antitrust violations or unfair competition, employment discrimination, misrepresentations to the FCC or other government agencies, or serious violations of the Communications Act or FCC regulations. We believe there are no
activities and no judicial or administrative proceedings in which we are involved that would warrant such a finding by the FCC.



The FCC also regulates a number of other aspects of the wireless business. Federal legislation enacted in 1993 requires the FCC to reduce the disparities
in the regulatory treatment of similar mobile services, such as



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cellular, PCS and enhanced specialized mobile radio, or ESMR, services. Under this regulatory structure, all of our PCS licenses are classified as Commercial
Mobile Radio Services, or CMRS, licenses. The FCC regulates CMRS carriers as common carriers, and thus we are subject to many generally applicable common carrier requirements under the Communications Act and FCC rules and regulations. The FCC,
however, has exempted cellular and PCS offerings from some typical common carrier regulations, such as tariff and interstate certification filings, thereby allowing us to respond more quickly to our competition in the marketplace. The 1993 federal
legislation also preempted state rate and entry regulation.



The FCC permits cellular, broadband PCS, paging and ESMR licensees to offer fixed services on a co-primary basis along with mobile services. This rule may facilitate the provision of wireless local loop service, which involves the use of
wireless links to provide local telephone service by CMRS licensees, although the extent of lawful state regulation of such wireless local loop service is undetermined. While we do not presently have a fixed service offering, our network is fully
capable of accommodating such a service. We continue to evaluate our service offerings which may include a fixed service plan at some point in the future.



Until April 4, 2005, the FCC requires that a PCS licensee ensure that its operations do not cause interference to incumbent licensees that operate fixed
microwave systems within the PCS licensees license area. In an effort to balance the competing interests of existing microwave users and newly authorized PCS licensees, the FCC adopted a transition plan to relocate such microwave operators to
other spectrum blocks and a cost sharing plan so that if the relocation of an incumbent benefits more than one PCS licensee, the benefiting PCS licensees will share the cost of the relocation. The transition and cost sharing plans expire on April 4,
2005, at which time remaining incumbents in the PCS spectrum will be responsible for their costs to relocate to alternate spectrum locations. We have fulfilled all of the relocation obligations (and related payments) we directly incurred in our PCS
markets, and we have ongoing obligations of approximately $3.8 million that are payable to other carriers under cost

sharing plans related to microwave
relocation in our markets. The FCC allows designated entities to pay these shared relocation expenses over the same term as the applicable FCC license for the area. Each of these obligations has a ten-year term, with interest only
payments through year six and principal payments commencing in year seven.



Ownership Restrictions



Pursuant to a Report
and Order released in December 2001, as of January 1, 2003, the FCC no longer enforces a particular limit on the amount of CMRS spectrum in which an entity may hold an attributable interest. The FCC now engages in a case-by-case review of
transactions that would raise concerns similar to those that the CMRS spectrum cap was designed to address. By eliminating a hard cap in favor of the more flexible analysis, we believe the changes adopted by the FCC in the December 2001 Report and
Order could further increase the ability of wireless operators to attract capital or to make investments in other wireless operators.



The FCC may prohibit or impose conditions on assignments and transfers of control of licenses. The Communications Act requires prior FCC approval for
assignments or transfers of control of any license or construction permit, with limited exceptions. Although we cannot assure you that the FCC will approve or act in a timely fashion upon any future requests for approval of assignments or transfer
of control applications that we file, we have no reason to believe that the FCC would not approve or grant such requests or applications in due course. Because an FCC license is necessary to lawfully provide PCS service, if the FCC were to
disapprove any such filing our business plans would be adversely affected.



The FCC allows broadband PCS licenses and service areas to be partitioned geographically or disaggregated by bandwidth, with each partitioned or disaggregated license covering a smaller service area and/or less
spectrum. Any such partitioning or disaggregation is subject to FCC approval, which cannot be guaranteed. In addition, on May 15, 2003, the FCC adopted a Report and Order to facilitate the development of a secondary market for unused or underused
wireless spectrum by imposing less restrictive standards for the transfer and



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lease of spectrum to third parties. The availability of these options provides us with a flexible alternative to obtain additional spectrum or dispose of
excess spectrum, subject to FCC approval and applicable FCC conditions. These alternatives also are available as a means for our competitors to obtain additional spectrum or for new competitors to enter our markets.



FCC rules establish specific ownership requirements for PCS licenses obtained
in the C and F block auctions, which are known as the entrepreneurs block auctions. Our licenses were obtained in the C block auction and thus are subject to these requirements. For the C block auction in which we acquired our licenses, the
FCCs rules permitted entities to exclude the gross revenues and assets of an entitys non-attributable investors in determining eligibility as a designated entity and small business, so long as the licensee employed one of two
control group structural options. We elected to meet the 25% control group structural option, which requires that, for the first ten years of the initial license term (which for us will end on January 27, 2007), a licensee have an established group
of investors that meet the requirements set forth for the entrepreneur block auctions, hold at least 50.1% of the voting interests of the licensee, have actual and legal control of both the control group and the licensee, and elect or appoint a
majority of the licensees board of directors. In addition, those qualifying investors are required to hold a percentage of the equity: after the first three years of the license term (which for us ended January 27, 2000), the qualifying
investors must collectively retain at least 10% of the equity interests in the licensee. The 10% equity interest may be held in the form of options, provided that these options are exercisable at any time, solely at the holders discretion, at
an exercise price less than or equal to the current market valuation of the underlying shares at the time of the short-form auction application filing date or, for options issued later, the date such options were issued. Finally, under the 25%
control group structural option, no investor or group of affiliated investors that is in the control group may hold more than 25% of the licensees overall equity during the initial license term.



Although the ownership requirements applicable to our FCC licenses will
expire on January 27, 2007, or the tenth anniversary of the date on which they were granted by the FCC, it is possible that we will acquire additional FCC licenses in the aftermarket that are subject to similar ownership restrictions. Depending on
when such licenses were initially granted by the FCC, in order to be eligible to hold such licenses we could be required to continue to comply with the 25% control group structural option beyond January 27, 2007, unless the FCC has approved a
different structural option for us.



Although the FCC
terminated future application of its control group requirements in August 2000, allowing licensees to qualify as designated entities by meeting alternative controlling interests rules, the FCC held that existing licensees could continue to qualify
under the rules in existence at the time they received their licenses. We met and continue to meet the 25% control group structural option. In order to meet the control group requirements, our certificate of incorporation provides that our Class A
common stock, as a class, must constitute 50.1% of the aggregate voting power of all classes and series of our capital stock and elect or appoint a majority of our board of directors. In addition, our bylaws provide for restrictions on transfer
relating to shares of our capital stock held by investors that are qualifying investors, and our certificate of incorporation includes redemption rights that allow us to redeem shares of our capital stock, as necessary, in order to ensure our
continued compliance with the control group structural option rules for the purposes of C block license requirements.



FCC rules also allowed companies to qualify as a designated entity in the 1996 C Block auction where they met the FCCs definition of a
Publicly Traded Corporation with Widely Dispersed Voting Power. To qualify for this alternative structural option, a company had to demonstrate that no person or entity:



| |  | owned more than 15% of the companys equity;
| | - | --------------------------------------------



| |  | possessed, either directly or indirectly, the power to control the election of more than 15% of the members of the companys board of directors; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  | had de facto control over the company.
| | - | --------------------------------------



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We intend to request approval from the FCC to adopt this alternative structure without financial penalty
after the consummation of this offering. Prior to the consummation of this offering, our certificate of incorporation will be amended to allow us to redeem shares of our capital stock to ensure that we are eligible for this structure.



FCC rules impose specific restrictions on the voluntary assignments or
transfers of control of C block licenses. During the first five years of the license term (or until the licensee satisfies the five-year construction benchmark), assignments or transfers of control are permitted, but only to entities that meet
specified qualifications, and if the original entity and the assignee or transferee have different entrepreneur or small business qualifications, the assignment or transfer may result in an obligation to make additional payments to the FCC. After
the first five years of the initial license term (which for us ended January 27, 2002), voluntary assignments and transfers of control to entities not meeting the eligibility criteria for participation in the entrepreneurs block are permitted;
however, if a license is being paid for in installments, as ours are, all unpaid principal and accrued interest on the license must be paid to the FCC as a condition of any assignment or transfer of control to a non-qualifying entity.



The Communications Act includes provisions that authorize the FCC to restrict
the level of ownership that foreign nationals or their representatives, a foreign government or its representative or any corporation organized under the laws of a foreign country may have in us. The law permits indirect ownership of as much as 25%
of our equity without the need for any action by the FCC. If the FCC determines that it is in the best interest of the general public, the FCC may revoke licenses or require an ownership restructuring in the event that such ownership exceeds the
statutory 25% benchmark. The FCC generally permits, however, additional indirect ownership in excess of the statutory 25% benchmark where that interest is to be held by an entity or entities from member countries of the World Trade Organization. For
investors from countries that are not members of the World Trade Organization, the FCC will determine whether the home country of the foreign investor extends reciprocal treatment called equivalent competitive opportunities to United
States entities. If these opportunities do not exist, the FCC may not permit investment beyond the 25% benchmark. These restrictions could adversely affect our ability to attract additional equity financing. We have no knowledge that any foreign
entity directly or indirectly owns a significant percentage of our capital stock.



General Regulatory Obligations



The
Communications Act and the FCCs rules impose a number of requirements upon PCS licensees. These requirements, which are summarized below, could increase our costs of doing business.



We are obligated to pay annual regulatory fees and assessments to support the FCCs regulation of the wireless
industry, as well as fees necessary to support federal universal service programs, number portability, regional database costs, centralized administration of telephone numbering, telecommunications relay service for the hearing-impaired and
application filing fees.



The FCC has adopted requirements for
CMRS providers to implement basic and enhanced 911, or E-911, services. These services provide state and local emergency service providers with the ability to better identify and locate callers using wireless services, including callers using
special devices for the hearing impaired. Our obligations to implement these services occur in stages, and on a market-by-market basis as emergency service providers request the implementation of E-911 services within their locales. In June 2002,
the FCC extended the deadlines for meeting some of these requirements, specifically the Phase II capabilities whereby emergency service providers receive the 911 callers geographic location until March 1, 2003 at the earliest (the actual date
for implementing this capability in any given locale will be based on the readiness of public safety agencies to participate in E-911 services). We are currently constructing facilities to implement these capabilities in several markets, although we
do not currently know whether we will be able to meet all of the requirements imposed by the FCC, whether some additional relief from these regulations will be required, or whether the FCC would grant such relief if we request that it do so. Absent
a waiver, failure to comply with the FCCs E-911 requirements



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could subject us to significant penalties. The extent to which we are required to deploy E-911 services will affect our capital spending obligations. The FCC
in 1999 amended its rules to eliminate a requirement that carriers be compensated for E-911 costs and expand the circumstances under which wireless carriers may be required to offer E-911 services. Federal legislation enacted in 1999 may limit our
liability for uncompleted 911 calls to a degree commensurate with wireline carriers in our markets.



Federal law also requires PCS carriers to provide law enforcement agencies with capacity to support lawful wiretaps and technical capabilities for
wiretaps. Federal law also requires compliance with wiretap-related record-keeping and personnel-related obligations. Maintaining compliance with these wireless 911 and law enforcement wiretap requirements may create additional capital obligations
for us to make necessary system upgrades.



Because the
availability of telephone numbers is dwindling, the FCC has adopted number pooling rules that govern the way in which telephone numbers generally are allocated. At present, number pooling is only mandatory within the wireline rate centers in which
we have drawn numbers and which are located in counties that are included in the top 100 MSAs as defined by the FCCs rules. Our markets are partially or wholly contained within the top 100 MSAs. We have expended capital preparing for number
pooling in these markets as well as preparing to support the roaming of pooled numbers into our markets. The FCC also has authorized states to initiate limited numbering administration to supplement federal requirements. Some of the states in which
we provide service have been so authorized.



In addition, the
FCC has ordered all carriers, including wireless carriers, to adopt a method for providing customers with telephone number portability, or the ability to keep their telephone numbers when they change telecommunications carriers, either wireless to
wireless or, in some instances, wireline to wireless, and vice versa. Under these local number portability rules, a CMRS carrier located in one of the top 100 MSAs must have the technology in place to allow its customers to port their telephone
numbers when they switch to a new carrier. Outside of the top 100 MSAs, CMRS carriers that receive a request to allow end users to port their telephone numbers must be capable of doing so within six months after receiving the request or within six
months of November 24, 2003, whichever is later. In addition, all CMRS carriers have been required since November 24, 2002 to support roaming nationwide for customers with ported or pooled numbers. These number portability requirements are likely to
result in added capital expenditures for us to make necessary system changes.



FCC rules provide that all local exchange carriers must enter into mutual compensation arrangements with CMRS carriers for the exchange of local traffic, whereby each carrier compensates the other for local traffic
that carrier terminates that originated on the other carriers network. Local traffic for purposes of the reciprocal compensation arrangement between local exchange carriers and CMRS carriers is defined as intra-MTA traffic, and thus the
FCCs reciprocal compensation rules apply to any local traffic originated by a CMRS carrier and terminated by a local exchange carrier within the same MTA and vice versa, even if such traffic is inter-exchange. While these rules provide that
local exchange carriers may not charge CMRS carriers for facilities used by CMRS carriers to terminate local exchange carriers traffic, local exchange carriers may charge CMRS carriers for facilities used for transit purposes to carry CMRS
carrier traffic to a third carrier. FCC rules provide that incumbent local exchange carriers must exchange local traffic with CMRS carriers at rates based on the FCCs costing rules if the CMRS carrier so requests; such rates are set by state
public utility commissions applying the FCCs rules. Some competitive (non-incumbent) local exchange carriers have claimed a right under existing FCC rules to impose unilateral charges on CMRS carriers for the termination of such carriers
traffic, based at above-cost rates, and have argued that they have no obligation to negotiate mutual compensation arrangements or to pay CMRS carriers for traffic transmitted indirectly over another carriers transit facilities. There are
petitions for declaratory ruling pending at the FCC that these carriers positions and related practices are contrary to law and relevant FCC precedent. The FCC also is currently considering changes to local exchange carrier-CMRS
interconnection and other so-called intercarrier compensation schemes, and the outcome of the proceeding may affect the manner in which CMRS carriers are charged or compensated for such traffic. We have generally been successful in negotiating
arrangements with carriers with which we exchange traffic; however,



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our business could be adversely affected should the rates some carriers charge us for terminating our customers traffic ultimately prove to be higher
than anticipated.



The FCC has adopted rules that require
interstate communications carriers, including PCS carriers, to make an equitable and non-discriminatory contribution to a Universal Service Fund, or USF, that reimburses communications carriers that provide basic communications services
to users who receive services at subsidized rates. We have made such payments, as the FCC has required. The FCC recently initiated a rule making proceeding in which it solicits public comment on ways of reforming both the manner by which it assesses
carrier contributions to the USF and the way in which carriers may recover their costs from customers. Effective April 1, 2003, the FCC prospectively forbade carriers from recovering from customers as USF charges their administrative costs
associated with administering the universal service assessments that carriers are required to pay. The FCCs new rules require that carriers USF recovery charges to customers may not exceed the assessment rate that the carrier pays times
the proportion of interstate telecommunications revenue on the bill. We are working diligently to comply with these new requirements. They may have an effect on our ability to recover our administrative costs for administering our participation in
the program.



Wireless carriers may be designated as eligible
telecommunications carriers, or ETCs, and may receive universal service support for providing service to customers that use wireless service in high cost areas. Other wireless carriers operating in states where we operate have obtained or applied
for ETC status. Such other carriers receipt of universal service support funds may affect our competitive status in a particular market, by allowing our competitors to offer service at a lower rate. We are currently contemplating whether and
where to apply for this designation in the various jurisdictions in which we provide wireless services to qualifying high cost areas. If such payments are made available to us, they would be an additional source of revenue to us that could be used
to support the service we provide in the high cost areas.



PCS
carriers are exempt from the obligation to provide equal access to interstate long distance carriers. However, the FCC has the authority to impose rules to require unblocked access through carrier identification codes or 800/888 numbers, so that PCS
customers are not denied access to the long distance carrier of their choosing, if the FCC determines that the public interest so requires. Our customers have access to alternative long distance carriers using toll-free numbers.



FCC rules also impose restrictions on a telecommunications carriers use
of customer proprietary network information, or CPNI, without prior customer approval, including restrictions on the use of information related to a customers location. We believe that our current marketing approach is consistent with FCC
rules on CPNI, and do not foresee new costs or limitations on our existing practices as a result of FCC rules in that area.



Telecommunications carriers are required to make their services accessible to persons with disabilities and the FCCs rules implementing these
requirements are in effect. These rules generally require service providers to offer equipment and services that are accessible to and usable by persons with disabilities, if readily achievable, and to comply with complaint/grievance procedures for
violations of these provisions. These rules are largely untested and are subject to interpretation through the FCCs complaint process. While much of the focus of these rules is on the manufacture of equipment, we could be subject to the
imposition of costly new requirements and, if found to have violated the rules, be subject to fines as well. As a related matter, on July 10, 2003, the FCC adopted an order requiring digital wireless phone manufacturers and wireless service
providers (including us) to take steps to ensure the availability of digital wireless phones that are compatible with hearing aids, which may increase our costs for handsets we sell.



The FCC has determined that interexchange, or long distance, service offerings of CMRS providers are subject to rate
averaging and rate integration requirements of the Communications Act. Rate averaging requires us to average our intrastate long distance CMRS rates between rural and high cost areas and urban areas. The



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FCC has delayed implementation of the rate integration requirements with respect to wide area rate plans pending further reconsideration of its rules, and
has delayed the requirement that CMRS carriers integrate their rates among CMRS affiliates. Other aspects of the FCCs rules have been vacated by the United States Court of Appeals for the District of Columbia Circuit, and are subject to
further consideration by the FCC. There is a pending proceeding in which the FCC will determine how integration requirements apply to CMRS offerings, including single rate plans. To the extent that we offer services subject to these requirements,
our pricing flexibility is reduced, and we cannot assure you that the FCC will decline to impose these requirements on us.



Antenna structures used by us and other wireless providers are subject to the FCCs rules implementing the National Environmental Policy Act and the
National Historic Preservation Act. Under these rules, any structure that may significantly affect the human environment or that may affect historic properties may not be constructed until the wireless provider has filed an environmental assessment
and obtained approval from the FCC. Processing of environmental assessments can delay construction of antenna facilities, particularly if the FCC determines that additional information is required or if there is community opposition. In addition,
several environmental groups unsuccessfully have requested changes in the FCCs environmental processing rules, challenged specific environmental assessments as inadequate to meet statutory requirements and sought to have the FCC conduct a
comprehensive assessment of the environmental effects of antenna tower construction. On February 13, 2003, several of these groups filed a petition with the United States Court of Appeals for the District of Columbia Circuit seeking to force the FCC
to modify its environmental processing rules to address issues under the Migratory Bird Treaty Act. Although the parties have filed briefs, there is no schedule for court action on this petition. On May 1, 2003, the FCC announced its intent to
develop a strategic plan to address environmental and historic preservation issues, but the FCC did not indicate when it will take action to adopt or implement this plan.



State, Local and Other Regulation



The Communications Act preempts state or local regulation of the market entry of, or the rates charged by, any CMRS provider, which include cellular
telephone service and PCS providers. The FCC denied the petitions of eight states to continue their rate regulation authority, including authority over cellular operators. As a practical matter, we are free to establish rates and offer new products
and service with a minimum of state regulatory requirements. The states in which we operate maintain nominal oversight jurisdiction, primarily focusing upon prior approval of acquisitions and transfers of licenses and resolution of customer
complaints. However, states may continue to regulate other terms and conditions of wireless service, and a number of state authorities have initiated actions or investigations of various wireless carrier practices. The outcome of these
proceedings is uncertain and could require us to change our marketing practices and ultimately increase state regulatory authority over the wireless industry. State and local governments are also permitted to manage public rights of way and can
require fair and reasonable compensation from telecommunications carriers, including PCS providers, so long as the compensation required is publicly disclosed by the government.



The location and construction of our PCS antennas and base stations and the towers we lease on which such antennas are
located are subject to FCC and Federal Aviation Administration regulations and are subject to federal, state and local environmental regulation, as well as state or local zoning, land use and other regulation. Before we can put a system into
commercial operation, we must obtain all necessary zoning and building permit approvals for the cell site and microwave tower locations. The time needed to obtain zoning approvals and requisite state permits varies from market to market and state to
state. Likewise, variations exist in local zoning processes. Additionally, any proposed site must comply with the FCCs environmental rules. If zoning approval or requisite state permits cannot be obtained, or if environmental rules make
construction impossible or infeasible on a particular site, our network design might be adversely affected, network design costs could increase and the service provided to our customers might be reduced.



We cannot assure you that any state or local regulatory requirements
currently applicable to our systems will not be changed in the future or that regulatory requirements will not be adopted in those states and localities,



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which currently have none. Such changes could impose new obligations on us that would adversely affect our operating results.



Future Regulation



From time to time, federal or state legislators propose legislation and federal or state regulators propose regulations that
could affect us, either beneficially or adversely. We cannot assure you that federal or state legislation will not be enacted, or that regulations will not be adopted or actions taken by the FCC or state regulatory authorities that might affect our
business adversely. Changes such as the allocation by the FCC of additional radio spectrum for services that compete with our business could affect our operating results adversely.



PART II





Item 6.Selected Financial Data



The following table sets forth selected consolidated financial and other data as of and for the years ended December 31, 1999, 2000, 2001, 2002 and 2003. We derived our selected consolidated financial data as of
December 31, 2002 and 2003 and for each of the three years in the period ended December 31, 2003 from our consolidated financial statements, which were audited by PricewaterhouseCoopers LLP and are included elsewhere in this report. We derived our
consolidated financial data as of December 31, 2001 from the consolidated financial statements, which were audited by PricewaterhouseCoopers LLP. We derived our selected consolidated financial data as of December 31, 1999 and 2000 from our
consolidated financial statements, which were audited by Arthur Andersen LLP. You should read the selected consolidated financial and other data in conjunction with Capitalization, Managements Discussion and Analysis of
Financial Condition and Results of Operations and our consolidated financial statements, including the notes thereto, included elsewhere in this report.



|                                                                               |  |                                               |       |      |   |       |  |      |        |      |   |         |  |   |        
|------------------------------------------------------------------------------ |  | --------------------------------------------- | ----- | ---- | - | ----- |  | ---- | ------ | ---- | - | ------- |  | - | -------
|                                                                               |  | Year Ended December 31,                      
|                                                                               |  | 1999                                          |       | 2000 |   | 2001  |  | 2002 |        | 2003
|                                                                               |  | (Dollars in thousands, except per share data)
|Statement of Operations Data:                                                  |  |                                               |       |      |   |       |  |      |        |      |   |         |  |   |        
|Revenues:                                                                      |  |                                               |       |      |   |       |  |      |        |      |   |         |  |   |        
|Service revenues                                                               |  | $                                             |      |      | $ |      |  | $    |       |      | $ | 102,137 |  | $ | 370,920
|Equipment revenues                                                             |  |                                               |      |      |   |      |  |      |       |      |   | 23,458  |  |   | 88,562 
|                                                                               |  |                                               |       |      |   |       |  |      |        |      |   |         |  |   |        
|Total revenues                                                                 |  |                                               |      |      |   |      |  |      |       |      |   | 125,595 |  |   | 459,482
|                                                                               |  |                                               |       |      |  
|Operating expenses:                                                            |  |                                               |       |      |   |       |  |      |        |      |   |         |  |   |        
|Cost of service (excluding depreciation included below)                        |  |                                               |      |      |   |      |  |      |       |      |   | 61,881  |  |   | 118,335
|Cost of equipment                                                              |  |                                               |      |      |   |      |  |      |       |      |   | 100,651 |  |   | 155,084
|Selling, general and administrative expenses (excluding non-cash compensation) |  |                                               | 3,170 |      |   | 3,411 |  |      | 27,963 |      |   | 55,515  |  |   | 90,556 
|Non-cash compensation                                                          |  |                                               | 1,002 |      |   | 1,222 |  |      | 1,455  |      |   | 1,115   |  |   | 7,379  



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|                                                                                          |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|----------------------------------------------------------------------------------------- |  | --------------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | -------- | ---- |  | - | -------- | -
|                                                                                          |  | Year Ended December 31,                       |        
|                                                                                          |  | 1999                                          |         |   | 2000 |   |         | 2001 |  |   | 2002    |   |  | 2003 |         
|                                                                                          |  | (Dollars in thousands, except per share data) |        
|Depreciation and amortization                                                             |  |                                               | 8       |   |      |   | 3       |      |  |   | 208     |   |  |      | 21,394   |      |  |   | 41,900   |  
|(Gain) loss on sale of assets (1)                                                         |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      | (278,956 | )(1) |  |   | 333      |  
|                                                                                          |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Total operating expenses                                                                  |  |                                               | 4,180   |   |      |   | 4,636   |      |  |   | 29,626  |   |  |      | (38,400  | )    |  |   | 413,587  |  
|                                                                                          |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Income (loss) from operations                                                             |  |                                               | (4,180  | ) |      |   | (4,636  | )    |  |   | (29,626 | ) |  |      | 163,995  |      |  |   | 45,895   |  
|                                                                                          |  |                                               |         |   |     
|Other (income) expense:                                                                   |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Interest expense                                                                          |  |                                               | 15,261  |   |      |   | 16,142  |      |  |   | 10,491  |   |  |      | 6,805    |      |  |   | 11,254   |  
|Interest income                                                                           |  |                                               | (67     | ) |      |   | (169    | )    |  |   | (2,046  | ) |  |      | (964     | )    |  |   | (1,061   | )
|(Gain) loss on extinguishment of debt                                                     |  |                                               |        |   |      |   |        |      |  |   | 7,109   |   |  |      |         |      |  |   | (603     | )
|                                                                                          |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Total other (income) expense                                                              |  |                                               | 15,194  |   |      |   | 15,973  |      |  |   | 15,554  |   |  |      | 5,841    |      |  |   | 9,590    |  
|                                                                                          |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Income (loss) before income taxes and cumulative effect of change in accounting principle |  |                                               | (19,374 | ) |      |   | (20,609 | )    |  |   | (45,180 | ) |  |      | 158,154  |      |  |   | 36,305   |  
|Provisions for income taxes                                                               |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      | (19,087  | )    |  |   | (15,665  | )
|Income (loss) before cumulative effect of change in accounting principle                  |  |                                               | (19,374 | ) |      |   | (20,609 | )    |  |   | (45,180 | ) |  |      | 139,067  |      |  |   | 20,640   |  
|Cumulative effect of change in accounting, net of tax                                     |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |         |      |  |   | (74      | )
|Net income (loss)                                                                         |  |                                               | (19,374 | ) |      |   | (20,609 | )    |  |   | (45,180 | ) |  |      | 139,067  |      |  |   | 20,566   |  
|Accrued dividends on Series C preferred stock                                             |  |                                               | (400    | ) |      |   | (422    | )    |  |   |        |   |  |      |         |      |  |   |         |  
|Accrued dividends on Series D preferred stock                                             |  |                                               |        |   |      |   | (195    | )    |  |   | (4,963  | ) |  |      | (10,838  | )    |  |   | (18,749  | )
|                                                                                          |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Net income (loss) applicable to common stock                                              |  | $                                             | (19,774 | ) |      | $ | (21,226 | )    |  | $ | (50,143 | ) |  | $    | 128,229  |      |  | $ | 1,817    |  
|                                                                                          |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Income (loss) per share:                                                                  |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|BASIC                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Income (loss) per share before cumulative effect of change in accounting principle        |  | $                                             | (0.43   | ) |      | $ | (0.38   | )    |  | $ | (0.72   | ) |  | $    | 1.13     |      |  | $ | 0.01     |  
|Cumulative effect per share of change in accounting principle, net of tax                 |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |         |      |  |   |         |  
|Net income (loss) per sharebasic                                                         |  |                                               | (0.43   | ) |      |   | (0.38   | )    |  |   | (0.72   | ) |  |      | 1.13     |      |  |   | 0.01     |  
|DILUTED                                                                                   |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Income (loss) per share before cumulative effect of change in accounting principle        |  | $                                             | (0.43   | ) |      | $ | (0.38   | )    |  | $ | (0.72   | ) |  | $    | 0.85     |      |  | $ | 0.01     |  
|Cumulative effect per share of change in accounting principle, net of tax                 |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |         |      |  |   |         |  
|Net income (loss) per sharediluted                                                       |  |                                               | (0.43   | ) |      |   | (0.38   | )    |  |   | (0.72   | ) |  |      | 0.85     |      |  |   | 0.01     |  
|Other Financial and Operating Data (GAAP):                                                |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Net cash provided by (used in) operating activities                                       |  | $                                             | (9,884  | ) |      | $ | (9,463  | )    |  | $ | (32,401 | ) |  | $    | (64,523  | )    |  | $ | 109,618  |  
|Net cash provided by (used in) investing activities                                       |  |                                               | (669    | ) |      |   | (15,093 | )    |  |   | 24,183  |   |  |      | (73,494  | )    |  |   | (137,321 | )
|Net cash provided by financing activities                                                 |  |                                               | 10,420  |   |      |   | 31,015  |      |  |   | 41,708  |   |  |      | 157,066  |      |  |   | 201,951  |  
|Cash used for capital expenditures                                                        |  |                                               | 669     |   |      |   | 93      |      |  |   | 133,604 |   |  |      | 212,305  |      |  |   | 117,212  |  
|                                                                                          |  |                                               |         |   |     
|Other Financial and Operating Data (Non-GAAP):                                            |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Adjusted EBITDA (2)                                                                       |  |                                               | (3,170  | ) |      |   | (3,411  | )    |  |   | (27,963 | ) |  |      | (92,452  | )    |  |   | 95,507   |  
|Adjusted EBITDA margin (3)                                                                |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |         |      |  |   | 20.8     | %
|                                                                                          | 
|                                                                                          |  | As of December 31,                            |        
|                                                                                          |  | 1999                                          |         |   | 2000 |   |         | 2001 |  |   | 2002    |   |  | 2003 |         
|                                                                                          |  | (In thousands)                                |        
|Balance Sheet Data:                                                                       |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |          |      |  |   |          |  
|Cash and cash equivalents                                                                 |  | $                                             | 2,719   |   |      | $ | 9,178   |      |  | $ | 42,668  |   |  | $    | 61,717   |      |  | $ | 235,965  |  
|Property and equipment, net                                                               |  |                                               | 995     |   |      |   | 98      |      |  |   | 169,459 |   |  |      | 353,360  |      |  |   | 482,965  |  
|Total assets                                                                              |  |                                               | 108,296 |   |      |   | 126,520 |      |  |   | 324,010 |   |  |      | 562,922  |      |  |   | 902,494  |  
|Total debt, net of unamortized discount                                                   |  |                                               | 79,697  |   |      |   | 81,251  |      |  |   | 48,548  |   |  |      | 50,850   |      |  |   | 195,795  |  



|(1) | In February 2002, we sold 10 MHz of excess spectrum in our Atlanta market resulting in a pre-tax gain of $279.0 million.
|--- | ------------------------------------------------------------------------------------------------------------------------

|(2) | We utilize certain financial measures that are not calculated in accordance with GAAP to assess our financial performance. A non-GAAP financial measure is defined as a numerical
measure of a companys financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the
statement of operations or statement of cash flows; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | Adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, average revenue per user, or ARPU, and cost per gross addition, or CPGA, are non-GAAP
financial measures utilized by our management to judge our ability to meet our liquidity requirements and to evaluate our operating performance. We believe these measures are important in understanding the performance of our operations from period
to period, and although every company in the wireless industry does not define each of these measures in precisely the same way, we believe that these measures (which are common in the wireless industry) facilitate key liquidity and operating
performance comparisons with other companies in the wireless industry. The following tables reconcile our non-GAAP financial measures with our financial statements presented in accordance with GAAP.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | We have presented adjusted EBITDA because this financial measure, in combination with other GAAP and non-GAAP financial measures, is an integral part of the internal reporting
system utilized by management to facilitate evaluation of our ability to meet future debt service, capital expenditure and working capital requirements and fund future growth. Adjusted EBITDA is a supplement to GAAP financial information and should
not be construed as an alternative to, or more meaningful than cash flows from operating activities, as determined in accordance with GAAP.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | The following table reconciles adjusted EBITDA to net cash provided by (used in) operating activities:
| | ------------------------------------------------------------------------------------------------------



|                                                     |  |                         |        |   |      |   |        |      |  |   |         |   |  |      |         |   |  |   |         |  
|---------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                     |  | Year Ended December 31, |       
|                                                     |  | 1999                    |        |   | 2000 |   |        | 2001 |  |   | 2002    |   |  | 2003 |        
|                                                     |  | (In thousands)          |       
|Calculation of Adjusted EBITDA:                      |  |                         |        |   |      |   |        |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net cash provided by (used in) operating activities: |  | $                       | (9,884 | ) |      | $ | (9,463 | )    |  | $ | (32,401 | ) |  | $    | (64,523 | ) |  | $ | 109,618 |  
|Interest expense, net interest income                |  |                         | 15,194 |   |      |   | 15,973 |      |  |   | 8,445   |   |  |      | 5,841   |   |  |   | 10,193  |  
|Bad debt expense amortization                        |  |                         |       |   |      |   |       |      |  |   |        |   |  |      | (381    | ) |  |   | (991    | )
|Accretion of asset retirement obligation             |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |        |   |  |   | (50     | )
|Non-cash interest                                    |  |                         | (4,396 | ) |      |   | (5,506 | )    |  |   | (3,882  | ) |  |      | (3,028  | ) |  |   | (3,090  | )
|Deferred rents                                       |  |                         |       |   |      |   |       |      |  |   | (949    | ) |  |      | (1,853  | ) |  |   | (1,160  | )
|Cost of abandoned cell site                          |  |                         |       |   |      |   | (987   | )    |  |   |        |   |  |      |        |   |  |   | (824    | )
|Non-deferred tax                                     |  |                         |       |   |      |   |       |      |  |   |        |   |  |      | 8,993   |   |  |   | 1,643   |  
|Working capital changes                              |  |                         | (4,084 | ) |      |   | (3,428 | )    |  |   | 824     |   |  |      | (37,501 | ) |  |   | (19,832 | )
|                                                     |  |                         |        |   |      |   |        |      |  |   |         |   |  |      |         |   |  |   |         |  
|Adjusted EBITDA                                      |  | $                       | (3,170 | ) |      | $ | (3,411 | )    |  | $ | (27,963 | ) |  | $    | (92,452 | ) |  | $ | 95,507  |  
|                                                     |  |                         |        |   |      |   |        |      |  |   |         |   |  |      |         |   |  |   |         |  



|(3) | Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by total revenues.
|--- | -----------------------------------------------------------------------------------



Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations



Introduction



We are a wireless communications provider that offers digital wireless service in the San Francisco, Miami, Atlanta and Sacramento metropolitan areas. The
year 2003 was the first full year of operations in all of our four market clusters. As a result of the significant growth we have experienced since we launched operations, our results of operations to date are not necessarily indicative of the
results that can be expected in future periods. Moreover, we expect that our number of customers will continue to increase, which will continue to contribute to increases in our revenues and operating expenses.



We sell products and services to customers through our 48 company-owned
retail stores as well as through relationships with indirect retailers. We primarily offer two monthly calling plans to our customers. One plan provides customers with unlimited calling within the local calling area for $35 per month; the other plan
provides customers with unlimited calling from within a local calling area to anywhere within the continental United States for $40 per month. For additional fees, we also provide caller ID, voicemail, text messaging, camera functions, downloads of
ringtones, games and content applications, international long distance and other value-added services. In 2002, we offered only one handset to customers for $149. Our offering of handsets has grown and as of December 31, 2003 we offered five
different handsets priced from $129 to $219. As of December 31, 2003, we had approximately 976,899 customers.



Critical Accounting Policies and Estimates



The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which
have been prepared in accordance with accounting principles



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generally accepted in the United States of America. You should read this discussion and analysis in conjunction with our consolidated financial statements
and the related notes thereto contained elsewhere in this report. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, allowance for doubtful accounts, inventory valuations, deferred income taxes, and the impairment of
long-lived and indefinite-lived assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.



Our customers pay in advance for our services. In accordance with
generally accepted accounting principles, amounts received in advance are recorded on our balance sheet as deferred revenue, and are recognized as service revenues on our statement of operations only when the services are actually rendered. Although
our billing system properly calculates the amount due from customers for service and properly records customer payments, it is not integrated with our accounting system and does not calculate service revenues or deferred revenue balances on a
customer-by-customer basis. As a result, management calculates gross service revenues based on the average number of customers within each service offering multiplied by the price of the relevant service offering. Gross service revenues are then
reduced by an amount attributable to the estimated number of customers included in our customer counts with handsets that have been disenabled, or hotlined, and whose service will be disconnected before they make a payment. Managements
controls over this process include detailed manual reconciliations between our billing system and our general ledger to insure that the balances in our deferred revenue accounts on the balance sheet are properly stated and we have properly recorded
service revenues on our statement of operations.



In
July 2003, during the preparation of quarterly financial statements, management noted that the balance of the deferred revenue accounts relative to service revenues had fluctuated from period to period in an inconsistent manner. Management called
this inconsistency to the attention of our auditors. In August 2003, prior to the time that MetroPCS, Inc. became a reporting company under the Securities Exchange Act of 1934, management and our auditors noted that the reconciliation of deferred
revenue did not include all the appropriate accounts receivable and deferred revenue accounts, and was not prepared on a timely basis. In September 2003, management concluded that we were understaffed in our revenue accounting function and that we
did not have personnel with the appropriate experience required to properly account for activity resulting from the billing system.



Management immediately began to implement steps to improve the capabilities and reliability of our financial and accounting systems in order to provide
reasonable assurance that our financial statements would not contain a material misstatement. At that time, our Chief Financial Officer began devoting substantial additional attention to our revenue accounting function in order to augment the
Controllers increased focus on this area that had begun in July 2003. In September 2003, we hired a Director of External Reporting, which enabled our Controller to devote additional time to our revenue accounting function. In October 2003, we
began a search for additional accounting personnel with relevant training and experience in this area. Management believes the increased attention by our Chief Financial Officer and our Controller during the second half of 2003 was sufficient to
remediate any understaffing in our revenue accounting function. In December 2003, we hired a Vice President-Controller and a Director of Revenue Accounting, whose responsibilities include direct oversight and supervision of our revenue accounting
function. These new personnel assumed their positions with us in early January 2004.



In October 2003, in connection with the review of our interim financial statements, our auditors issued a letter to us describing these deficiencies. In February 2004, in connection with the audit of our financial
statements for the year ended December 31, 2003, our auditors identified the lack of automation in the revenue reporting process as a material weakness in our internal controls over revenue reporting. The Public Company Accounting
Oversight Board has defined material weakness as a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual



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or interim financial statements will not be prevented or detected. This means that there is a risk that a material misstatement in the deferred revenue
accounts and the related service revenue accounts in our financial statements for a future period is reasonably possible.



To address revenue reporting, management made significant changes to the manual calculation and reconciliation processes to insure proper revenue
reporting, including implementation of the following procedures by the end of the third quarter of 2003:





| |  | a more timely and complete monthly reconciliation of accounts receivable balances provided by our billing system to the corresponding balances in our general ledger and the related
deferred revenue accounts;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | monthly comparative analyses of our balance sheet account and income statement account trends, and monthly actual-to-budget variance analyses of income statement accounts; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | monthly comparative analysis of revenues per customer compared to prior months and compared to budget, on both a market-by-market basis and a company-wide basis.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



We began a monthly reconciliation of cash received to
recorded service revenues and deferred revenues that was utilized in the December 31, 2003 year-end close process.



As a result of these procedures, management and our auditors identified and recorded adjustments to our deferred revenue and service revenues accounts
during the course of the preparation of the financial statements for the period. These adjustments totaled $110,000 for the three months ended December 31, 2003, or 0.1% of service revenues and 1.2% of income from operations for such period. These
procedures also resulted in reclassification entries on our balance sheet prior to its issuance to properly classify amounts between deferred revenue and other liability accounts related to taxes and other charges to customers.



Management believes that the implementation of these procedures, together
with the recording of the resulting adjustments prior to issuance of the related financial statements, were sufficient to permit it to conclude that the material weakness in our internal controls over revenue reporting had not resulted in a material
misstatement of our financial statements.



To further
enhance our internal controls, as discussed above, we have added a Vice President-Controller and a Director of Revenue Accounting, each of whom has several years of relevant experience with revenue and billing systems in the telecommunications
industry. We have also hired a senior accounting professional whose focus is to make sure that we are effectively utilizing all of the functions available in our billing system, expand the related reporting capabilities, and continue to enhance and
further automate our processes related to revenue accounting. We have increased the overall size of the revenue accounting staff from three persons during most of 2003 to a staff of six currently. In order to reduce the risk of manual errors, we are
automating the summarization and transfer of information from our billing system to our general ledger. We are also developing reports that will substantially improve our control over the revenue calculation and deferred revenue reconciliation
process.



While these efforts represent significant
steps in remediating the material weakness, management believes, and our auditors have advised us based on their review of our financial statements for the three months ended March 31, 2004, that the material weakness still exists due to the lack of
automation in this area. Moreover, our auditors have advised us that they will not be able to confirm that the material weakness has been fully remediated until they complete an audit of our financial statements. We expect our next audit to be
completed in March 2005.



Remediation of the material
weakness requires the automation of reports, including the development of reporting that details the deferred revenue and service revenues accounts on a customer-by-customer basis. Remediation will also require the automation of the transfer of
information between our billing system and our



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general ledger, which is currently being performed manually. Development of these automated processes is currently ongoing. Although we intend to eliminate
the material weakness by December 31, 2004, we cannot assure you that we will be able to do so.



Revenue Recognition



Our wireless services are provided on a month-to-month basis and are paid in advance. We recognize revenues from wireless services as they are rendered.
Amounts received in advance are recorded as deferred revenue. Disenabling service for non-payment is known as hotlining. We do not recognize revenue on hotlined customers.



Revenues and related costs from the sale of accessories are recognized at the point of sale. The cost of handsets sold
to indirect retailers are included in deferred charges until they are sold to and activated by customers. Amounts billed to indirect retailers for handsets are recorded as accounts receivable and deferred revenue upon shipment by us and are
recognized as equipment revenues when service is activated by customers. Customers have the right to return handsets within a specified time or usage, whichever occurs first. Of the total paid by a new customer for a handset and activation, we
record an activation fee of $15, which, since July 1, 2003, is generally recognized in equipment revenue at the time service is activated. We record an estimate for returns at the time of recognizing revenue.



Beginning July 1, 2003, we implemented EITF No. 00-21, Accounting
for Revenue Arrangements with Multiple Deliverables, prepared by the Emerging Issues Task Force, or EITF, of the Financial Accounting Standards Board, or FASB. EITF 00-21 requires us to allocate amounts charged to customers between the sale of
handsets and the sale of wireless telecommunication services on a relative fair value basis. This has resulted in the amount collected from the customer being allocated to the sale of the handset and to the first months service fee. As a
result of this treatment, activation fees included in the consideration at the time of sale are generally recorded as handset revenue. Prior to the adoption of EITF 00-21, we had deferred activation fee revenue and amortized these revenues over the
average life of our customers. The existing deferred revenue at July 1, 2003 is being amortized over the average life of our customers. On October 1, 2003, we changed the estimated average customer life from 25 months to 14 months, based on
historical disconnect rates, resulting in an increase in activation revenue of $5.1 million in the fourth quarter of 2003 over amounts that would have been recognized using the prior estimated average life.



Allowance for Doubtful Accounts and Returns



We maintain allowances for doubtful accounts for estimated losses
resulting from the inability of our indirect retailers to pay for equipment purchases and for returns. If the financial condition of a material portion of our indirect retailers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.



Inventory



We write down our inventory
for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value or replacement cost based upon assumptions about future demand and market conditions. If actual market
conditions are less favorable than those projected, additional inventory write-downs may be required.



Deferred Income Tax Asset



We assess our deferred tax asset and record a valuation allowance, when necessary, to reduce our deferred tax asset to the amount that is more likely than
not to be realized. We have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. Should we determine that we would not be able to realize all or part of our net
deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period we made that determination.



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We establish reserves when, despite our belief that our tax returns are fully supportable, we believe
that certain positions may be challenged and ultimately modified. We adjust the reserves in light of changing facts and circumstances. Our effective tax rate includes the impact of reserve positions and changes to reserves that we consider
appropriate. A number of years may elapse before a particular matter for which we have established a reserve is finally resolved. Unfavorable settlement of any particular issue would require the use of cash. Favorable resolution would be recognized
as a reduction to the effective rate in the year of resolution. The tax reserves are presented on the balance sheet in other long term liabilities.



Impairment of Long-Lived Assets and Indefinite Lived Assets



We assess the impairment of long-lived assets, other than indefinite-lived intangible assets, whenever events or changes
in circumstances indicate the carrying value may not be recoverable. Factors we consider important that could trigger an impairment review include significant underperformance relative to historical or projected future operating results or
significant changes in the manner of use of the assets or in the strategy for our overall business. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and
eventual disposition of the asset. When we determine that the carrying value of a long-lived asset is not recoverable, we measure any impairment based upon a projected discounted cash flow method using a discount rate we determine to be commensurate
with the risk involved.



Our primary indefinite-lived
intangible assets are our FCC licenses. We test investments in our FCC licenses for impairment annually or more frequently if events or changes in circumstances indicate that our FCC licenses may be impaired. The impairment test consists of a
comparison of the fair value with the carrying value. We segregate our FCC licenses by regional market for the purpose of performing the impairment test as each geographical region is unique.



Valuation of Common Stock



Historically, we have assessed the value of our common stock at the end
of each reporting period for the purpose of determining stock compensation on variable stock options. This valuation was also used to determine deferred compensation, if any, on non-variable stock option awards granted in the period, as well as for
purposes of determining whether a beneficial conversion feature was in existence at each draw date of our Series D cumulative convertible redeemable preferred stock. Factors we considered were recent sales of stock to third parties, enterprise
valuation ranges provided by third parties, the liquidation preference of our outstanding preferred stock, significant milestones achieved in the business, as well as the overall economic climate of the wireless industry.



Customer Recognition and Disconnect Policies



When a new customer subscribes to our service, the first month of
service and activation fee is included with the handset purchase. Under GAAP, we are required to allocate the purchase price to each of the handset, the first month of service and the activation fee. Generally, the amount allocated to the handset
will be less than our cost, and this difference is included in cost per gross addition, or CPGA. We recognize new customers as gross additions upon activation of service. We offer our customers the MetroPCS Promise, which allows a customer to return
a newly purchased handset for a full refund prior to the earlier of seven days or 60 minutes of use. Customers who return their phones under the MetroPCS Promise are reflected as a reduction to gross additions. Customers monthly service
payments are due in advance every month. Our customers must pay their monthly service amount by the payment date or their handset will be disenabled, or hotlined, and the customer will not be able to make or receive calls on our network. There is no
service grace period. Any call attempted by a hotlined customer is routed directly to our interactive voice response system and customer service center in order to arrange payment. If the customer pays the amount due within 30 days of the original
payment date then the customers handset is unhotlined and service is restored. If a hotlined customer does not pay the amount due within 30 days of the payment date the account is disconnected and counted as churn. Once an account is



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disconnected, upon reactivation, we charge a $15 reconnect fee to reestablish service and the revenue associated with this fee is deferred and recognized
over the estimated life of the customer.



Revenues



We derive our revenues from the following sources:



Service. We sell wireless personal communications services. The
various types of service revenues associated with wireless communications services for our customers include monthly recurring charges for airtime, monthly recurring charges for optional features (including voicemail and text messaging) and charges
for long distance service. Service revenues also include intercarrier compensation and non-recurring activation service charges to customers to the extent not allocated to handset revenue. See Critical Accounting Policies and
EstimatesRevenue Recognition.



Equipment. We
sell wireless personal communications handsets and accessories that are used by our customers in connection with our wireless services. This equipment is also sold to indirect retailers to facilitate distribution to our customers.



Costs and Expenses



Our costs and expenses include:



Cost of Service. The major components of our cost of service are:



| |  | Variable Long Distance. We pay charges to other communications companies for long distance service provided to our customers. These variable charges are based on our
customers usage, applied at pre-negotiated rates with the long-distance carriers.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Intercarrier Compensation. We pay charges to other communications companies for their transport and termination of calls originated by our customers and destined for
customers of other networks. These variable charges are based on our customers usage and generally applied at pre-negotiated rates with other carriers, although some carriers have sought to impose such charges unilaterally. Historically, these
charges have been declining on a per minute basis and we expect them to continue to decline, due principally to competitive pressures and new technologies.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Cell Site Costs. We incur expenses for the rent of towers, network facilities, engineering operations, field technicians and related utility and maintenance charges.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



Cost of Equipment. We purchase personal
communications handsets and accessories from third-party vendors to resell to our customers and indirect retailers in connection with our services. We subsidize the sale of handsets to encourage the sale and use of our services. We do not
manufacture any of this equipment.



Selling, General and
Administrative Expenses. Our selling expense includes advertising and promotional costs associated with capturing new customers and fixed charges such as store rent and retail associates salaries. General and administrative expense
includes support functions including, customer care, billing, technical operations, finance, accounting, human resources, information technology and legal services.



Non-cash Compensation. We record compensation expense associated with employee stock options issued below
estimated fair market value at the date of grant. In addition, we record compensation expense at the end of each reporting period with respect to our variable stock options.



Depreciation and Amortization. Depreciation is applied using the straight-line method over the estimated useful
lives of the assets once the assets are placed in service, which are ten years for network infrastructure assets, three to seven years for office equipment, including computer equipment, and three to seven years for



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furniture and fixtures. Leasehold improvements are amortized over the term of the respective leases or the estimated useful life of the improvement,
whichever is shorter.



Interest Expense and Interest
Income. Interest expense consists of interest on our FCC notes based on an estimated fair market borrowing rate at the time of issuance, of which 6.5% is paid in cash, and interest on our senior notes. Interest income is earned primarily on our
cash and cash equivalents.



Income Taxes. As a
result of our operating losses and additional depreciation available under federal tax laws in 2003, we have paid no federal income taxes to date. In addition, we have paid an immaterial amount of state income tax to date.



Results of Operations



Year Ended December 31, 2003 Compared to Year Ended December 31, 2002



Set forth below is a summary of certain financial information
for the periods indicated:



|                                                                                              |  |                |         |      |   |         |  |     |   
|--------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- | - | ------- |  | --- | --
|                                                                                              |  |                |        
|                                                                                              |  | 2002           |         | 2003 |   | Change  | 
|                                                                                              |  | (In thousands) |         |      |  
|Revenues                                                                                      |  |                |         |      |   |         |  |     |   
|Service revenues                                                                              |  | $              | 102,137 |      | $ | 370,920 |  | 263 | % 
|Equipment revenues                                                                            |  |                | 23,458  |      |   | 88,562  |  | 278 | % 
|Cost of service (excluding depreciation included below)                                       |  |                | 61,881  |      |   | 118,335 |  | 91  | % 
|Cost of equipment                                                                             |  |                | 100,651 |      |   | 155,084 |  | 54  | % 
|Selling, general and administrative expenses (excluding non-cash compensation included below) |  |                | 55,515  |      |   | 90,556  |  | 63  | % 
|Non-cash compensation                                                                         |  |                | 1,115   |      |   | 7,379   |  | 562 | % 
|Depreciation and amortization                                                                 |  |                | 21,394  |      |   | 41,900  |  | 96  | % 
|Net income                                                                                    |  |                | 139,067 |      |   | 20,566  |  | (85 | %)



Revenues.    Total revenues increased $333.9 million, or 266%, to $459.5 million for the year ended December 31, 2003 from $125.6 million for the year ended December 31, 2002.



Service revenues increased $268.8 million, or 263%, to $370.9 million for
the year ended December 31, 2003 from $102.1 million for the year ended December 31, 2002. The increase was attributable to the timing of the commercial launch of our four market clusters and a 268% increase in the number of our customers. We
launched service in our Miami market in January 2002, in our Atlanta and Sacramento market clusters in February 2002, and in our San Francisco market cluster in September 2002. We launched commercial operations on the west coast of southern Florida
in October 2003.



Equipment revenues increased $65.1
million, or 278%, to $88.6 million for the year ended December 31, 2003 from $23.5 million for the year ended December 31, 2002. The increase was attributable to a 43% increase in gross additions and a 99% increase in revenue per handset and upgrade
sales to our existing customers, resulting in an increase of $16.6 million in equipment revenues. In 2002, we offered only one handset model to new customers.



Cost of Service.    Cost of service increased $56.5 million, or 91%, to $118.3 million for
the year ended December 31, 2003 from $61.9 million for the year ended December 31, 2002. The increase was attributable to the timing of the commercial launch of our four market clusters and the increase in our number of customers, which resulted in
a $16.0 million increase in interconnect fees, a $12.9 million increase in call center expenses, a $7.8 million increase in billing expenses, a $6.5 million increase in long distance costs, a $5.8 million increase in E-911 fees. Additionally,
employee costs, cell site and switch facility lease expense and repair and maintenance expense increased as a result of the growth of our business and the expansion of our network.



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##### Table of Contents

Cost of Equipment.    Cost of equipment increased by $54.4 million, or
54%, to $155.1 million for the year ended December 31, 2003 from $100.7 million for the year ended December 31, 2002. The increase was due to a 66% increase in the number of handsets sold offset by a 7% reduction in average handset cost per unit.



Selling, General and Administrative
Expenses.    Selling, general and administrative expenses increased $35.0 million, or 63%, to $90.6 million for the year ended December 31, 2003 from $55.5 million for the year ended December 31, 2002. Selling expenses
increased by $17.6 million as a result of increased sales and marketing activities. General and administrative expenses increased by $17.4 million primarily due to the increase in our customer base and to network expansion, including a $5.8 million
increase in transaction fees for customer collections, a $2.1 million increase in handset repair fees, a $3.0 million increase employee salaries and benefits, a $1.5 million increase in maintenance agreements for our network facilities, a $1.5
million increase in property insurance and a $1.1 million increase in professional fees.



Non-cash Compensation.    Non-cash compensation increased $6.3 million to $7.4 million for the year ended December 31, 2003
from $1.1 million for the year ended December 31, 2002, as a result of an increase in the estimated fair market value of our stock used for valuing stock options accounted for under variable accounting.



Depreciation and Amortization.    Depreciation
and amortization expense increased $20.5 million, or 96%, to $41.9 million for the year ended December 31, 2003 from $21.4 million for the year ended December 31, 2002. The increase related primarily to the increase in network assets in service
due to the timing of the commercial launch of our four market clusters. In-service base stations and switching equipment increased by $123.4 million during the year ended December 31, 2003. In addition, we had 142 more cell sites in service at
December 31, 2003 than at December 31, 2002. We expect depreciation to continue to increase due to the additional cell sites and switches that we plan to place in service to meet future customer growth and usage.



Interest Expense.     Interest expense
increased $4.5 million, or 65%, to $11.3 million for the year ended December 31, 2003 from $6.8 million for the year ended December 31, 2002. The increase was primarily attributable to additional interest on our $150.0 million of 103/4% senior notes issued in September 2003.



Net Income.    Net income decreased $118.5 million, or 85%, to $20.6 million for the
year ended December 31, 2003 from $139.1 million for the year ended December 31, 2002. Net income for the year ended December 31, 2002 included a $279.0 million ($245.3 million after tax) gain on the sale of 10 MHz of spectrum in our
Atlanta market.



Set forth below is a summary of
certain non-GAAP financial information for the periods indicated:



|                               |  |      |         |   |      |   |         |        |  |     |   
|------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ------ |  | --- | --
|                               |  | 2002 |         |   | 2003 |   |         | Change | 
|Customers                      |  |      |         |   |      |   |         |        |  |     |   
|End of period                  |  |      | 513,484 |   |      |   | 976,899 |        |  | 90  | % 
|Net additions                  |  |      | 513,484 |   |      |   | 463,415 |        |  | (10 | %)
|Churn                          |  |      |         |   |      |   |         |        |  |     |   
|Average monthly rate           |  |      | 4.4     | % |      |   | 4.6     | %      |  | 5   | % 
|ARPU                           |  | $    | 39.17   |   |      | $ | 37.68   |        |  | (4  | %)
|CPGA                           |  |      | 158.50  |   |      |   | 99.86   |        |  | (37 | %)
|Adjusted EBITDA (In thousands) |  |      | (92,452 | ) |      |   | 95,507  |        |  | *   |   

---

|* | Not meaningful.
|- | ---------------



Customers.    Net customer additions were 463,415 for the year ended December 31, 2003, bringing our total customers to 976,899
as of December 31, 2003, an increase of 90% over the customer total as of December 31, 2002. This increase was due to the timing of our commercial launch and the continued demand for our service offering.



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Churn.    The average monthly churn rate was 4.6% and 4.4% for the years
ended December 31, 2003 and 2002, respectively.



Average Revenue Per User.    ARPU was $37.68 and $39.17 for the years ended December 31, 2003 and 2002, respectively. The $1.49, or 3.8%, decrease in ARPU was primarily the result of an increase in customers that
did not pay for service while in hotlined status. For more detail regarding our calculation of ARPU, refer to Reconciliation of Non-GAAP Financial Measures below.



Cost Per Gross Addition.    CPGA was $99.86 and $158.50 for the years ended December 31, 2003
and 2002, respectively. The $58.64, or 37%, decrease in CPGA was the result of an increase in activation fees revenue as well as lower per unit handset subsidies. Equipment costs for handsets sold to existing customers, including handset upgrade
transactions, are excluded from CPGA as these costs are incurred specifically for existing customers. For more detail regarding our calculation of CPGA, refer to Reconciliation of Non-GAAP Financial Measures below.



Adjusted EBITDA.    Adjusted
EBITDA increased $188.0 million to $95.5 million for the year ended December 31, 2003 from an adjusted EBITDA deficit of $92.5 million for the year ended December 31, 2002. The increase was primarily the result of customer and revenue growth and
spreading operating costs over a larger customer base. For more detail regarding our calculation of adjusted EBITDA, refer to Reconciliation of Non-GAAP Financial Measures below.



Year Ended December 31, 2002 Compared to Year Ended
December 31, 2001



Set forth below
is a summary of certain financial information for the periods indicated:



|                                                                                              |  |                |         |   |      |   |         |  |     |   
|--------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- |  | --- | --
|                                                                                              |  | 2001           |         |   | 2002 |   | Change  | 
|                                                                                              |  | (In thousands) |         |   |     
|Selling, general and administrative expenses (excluding non-cash compensation included below) |  | $              | 27,963  |   |      | $ | 55,515  |  | 99  | % 
|Non-cash compensation                                                                         |  |                | 1,455   |   |      |   | 1,115   |  | (23 | )%
|Depreciation and amortization                                                                 |  |                | 208     |   |      |   | 21,394  |  | *   |   
|Net income (loss)                                                                             |  |                | (45,180 | ) |      |   | 139,067 |  | *   |   

---

|* | Not meaningful.
|- | ---------------



Revenues.    Total revenues were $125.6 million for the year ended December 31, 2002. We were a development stage company until
our commercial launch in January 2002; therefore, we had no revenues in 2001.



Service revenues were $102.1 million for the year ended December 31, 2002. Our customer base grew to approximately 513,000 customers at December 31, 2002. ARPU was $39.17 for the year ended December 31, 2002.



Equipment revenues were $23.5 million for the year
ended December 31, 2002. We did not sell handsets or other products prior to 2002.



Cost of Service.    Cost of service was $61.9 million for the year ended December 31, 2002. We had no cost of service in 2001.



Cost of Equipment.    Cost of equipment was
$100.7 million for the year ended December 31, 2002. We did not sell handsets or other products prior to 2002; therefore, we had no cost of equipment in 2001.



Selling, General and Administrative Expenses.    Selling, general and administrative expenses
including non-cash compensation increased $27.2 million, or 93%, to $56.6 million for the year ended December 31, 2002 from $29.4 million for the year ended December 31, 2001. Selling expenses were $26.5 million in 2002, compared to no selling
expenses in 2001. General and administrative expenses were $30.1 million in 2002, which



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included additional staffing due to the timing of the launch of our business. General and administrative expenses in 2001 were $29.4 million, which included
$9.5 million primarily related to build-out activities, which prior to commercial launch were classified in general and administrative expenses.



Depreciation and Amortization.    Depreciation and amortization expense was $21.4 million for the year ended December
31, 2002, compared to $0.2 million for the year ended December 31, 2001. The increase related primarily to depreciating wireless network assets for the switches and cell sites put into operation during 2002, along with depreciating furniture and
equipment purchased for our offices and retail stores.



Interest Expense and Interest Income.    Interest expense decreased $3.7 million, or 35%, to $6.8 million for the year ended December 31, 2002 from $10.5 million for the year ended December 31, 2001. This decrease
resulted from a reduction of a portion of our FCC notes following our sale of spectrum in 2002 and the settlement of notes to an equipment vendor in the third quarter of 2001. Interest income was $1.0 million for the year ended December 31, 2002, as
compared to $2.0 million for the year ended December 31, 2001. This decrease was due to a decline in interest rates on our short-term investments as well as lower average cash balances.



Net Income.    Net income was $139.1 million
for the year ended December 31, 2002, as compared to a net loss of $45.2 million for the year ended December 31, 2001. Net income for the year ended December 31, 2002 included a $279.0 million ($245.3 million after tax) gain on the sale of 10 MHz of
spectrum in our Atlanta market.



Liquidity and Capital
Resources



The construction of our network and the
marketing and distribution of our wireless communications products and services have required, and will continue to require, substantial capital investment. Capital outlays have included license acquisition costs, capital expenditures for network
construction, funding of operating cash flow losses and other working capital costs, debt service and financing fees and expenses. We estimate that our aggregate capital expenditures for 2004, which will be primarily associated with our efforts to
increase the capacity of our network through the addition of cell sites and switches, will be approximately $230 million. A portion of this amount includes the cost to begin the build out of our network for the newly acquired licensed areas in
northern California. Such amount represents an increase of approximately $20 million from our prior estimate of 2004 capital expenditures, and is primarily due to additional network capacity requirements necessitated by the increased demand of
adding more subscribers than planned whose average usage is higher than planned. We believe the increased service area and capacity will improve our service offering and thereby help us to attract additional customers and increase revenues. We
believe our cash on hand and cash generated from operations will be sufficient to meet our projected capital requirements for the foreseeable future. Although we estimate that these funds will be sufficient to finance our continued growth, we may
have additional capital requirements, which could be substantial, for future network upgrades and advances in new technology.



Existing Indebtedness. As of December 31, 2003, we had $195.8 million of total indebtedness, consisting of $150.0 million principal amount of our
senior notes, $46.8 million face amount of our FCC notes, which are recorded net of unamortized original issue discount of $4.8 million, and $3.8 million of debt associated with our obligation to other carriers for the cost of clearing microwave
links in areas covered by our licenses.



Other
Long-Term Liabilities.    As of December 31, 2003, we had approximately $20.6 million in other long-term liabilities, comprised of liabilities to certain network equipment providers, the primary cause of the increase, and our
reserve for uncertain tax positions, as compared to $1.8 million as of December 31, 2002.



Historical Cash Flow. As of December 31, 2003, we had $236.0 million in cash and cash equivalents, as compared to $61.7 million at December 31, 2002. Cash provided by operating activities was $109.6 million
during the year ended December 31, 2003 as a result of our net income of $20.6 million and $70.1 million of non-cash charges consisting primarily of depreciation and amortization, deferred expenses, accretion of interest and non-cash compensation,
and $18.9 million of cash provided by changes in working capital. Cash used in



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investing activities was $137.3 million during the year ended December 31, 2003, primarily relating to capital expenditures associated with increasing the
capacity of our network. Cash provided by financing activities was $202.0 million during the year ended December 31, 2003, primarily relating to the net proceeds from the sale of our senior notes of $144.5 million and the sale of our Series D
preferred stock of $65.5 million.



As of December 31,
2002, we had $61.7 million in cash and cash equivalents, as compared to $42.7 million in cash and cash equivalents at December 31, 2001. Cash used in operating activities was $64.5 million during the year ended December 31, 2002 as a result of our
net income of $139.1 million, $37.5 million of cash provided by changes in working capital and $37.9 million of non-cash charges consisting primarily of depreciation and amortization, deferred income taxes, accretion of interest, and non-cash
compensation, offset by a $279.0 million gain resulting from our sale of spectrum, the proceeds of which are included in investing cash flows. Cash used by investing activities was $73.5 million during the year ending December 31, 2002, related to
capital expenditures associated with our network build-out, offset by $141.2 million of proceeds on our sale of spectrum. Cash provided by financing activities was $157.1 million during the year ended December 31, 2002, primarily relating to
proceeds from the sale of our preferred stock.



Cash
used in operating activities was $32.4 million during the year ended December 31, 2001 as a result of our net loss of $45.2 million and $0.8 million of cash used in changes in working capital, offset by $13.6 million consisting of loss on
extinguishment of debt, depreciation and amortization, accretion of interest and non-cash compensation and other expenses. Cash provided by investing activities was $24.2 million during the year ending December 31, 2001, primarily relating to an
advance associated with our sale of spectrum that ultimately closed in 2002, offset by capital expenditures associated with our network build-out. Cash provided by financing activities was $41.7 million during the year ended December 31, 2001,
primarily relating to proceeds from the sale of our preferred stock.



We have realized significant increases in cash flows from operating activities and adjusted EBITDA during 2003 as the scale of our business and the size of our customer base have grown. While we believe that our
current business will continue to generate increasing cash flows from operating activities and adjusted EBITDA in the long-term, accelerated near-term growth could adversely affect operating cash flows and adjusted EBITDA as a result of the costs
required to attract new customers, including handset subsidies and increased advertising and marketing expenses. As a result of our growth strategy, our cash flows from operating activities and adjusted EBITDA for 2004 may decline as compared to
recent historical periods.



Contractual Obligations and Commercial
Commitments



The following table provides aggregate
information about our contractual obligations as of December 31, 2003. See note 8 to our consolidated financial statements included elsewhere in this report.



|                                                       |  |                        |                |                  |   |           |  |           |         |                   |   |        |  |   |        
|------------------------------------------------------ |  | ---------------------- | -------------- | ---------------- | - | --------- |  | --------- | ------- | ----------------- | - | ------ |  | - | -------
|                                                       |  | Payments Due by Period
|                                                       |  | Total                  |                | Less Than 1 Year |   | 1-3 Years |  | 3-5 Years |         | More Than 5 Years
|Contractual Obligations                                |  |                        | (In thousands)
|Long-term debt, including current portion and interest |  | $                      | 200,588        |                  | $ | 13,362    |  | $         | 29,453  |                   | $ | 4,252  |  | $ | 153,521
|Interest paid in cash                                  |  |                        | 136,035        |                  |   | 19,092    |  |           | 35,455  |                   |   | 32,791 |  |   | 48,697 
|Operating leases                                       |  |                        | 172,885        |                  |   | 29,337    |  |           | 58,220  |                   |   | 39,083 |  |   | 46,245 
|Firm purchase commitments                              |  |                        | 22,139         |                  |   | 13,622    |  |           | 8,517   |                   |   |       |  |   |       
|                                                       |  |                        |                |                  |   |           |  |           |         |                   |   |        |  |   |        
|Total cash contractual obligations                     |  | $                      | 531,647        |                  | $ | 75,413    |  | $         | 131,645 |                   | $ | 76,126 |  | $ | 248,463
|                                                       |  |                        |                |                  |   |           |  |           |         |                   |   |        |  |   |        



Inflation



We believe that inflation has not affected our operations materially.



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Qualitative and Quantitative Disclosures About Market Risk



Market risk is the potential loss arising from adverse changes in market
prices and rates, including interest rates. We do not enter into derivatives or other financial instruments for trading, speculative or hedging purposes. Our outstanding indebtedness bears interest at fixed rates.



Effect of New Accounting Standards



In July 2001, the FASB issued Statement of Financial Accounting Standards,
or SFAS, No. 143, Accounting for Asset Retirement Obligations. This statement provides accounting and reporting standards for costs associated with the retirement of long-lived assets. This statement requires entities to record the fair
value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the
liability is accreted to its present value each period, and the capitalized cost is depreciated over the estimated useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement.



We are subject to asset
retirement obligations associated with our cell site operating leases, which are subject to the provisions of SFAS No. 143. Cell site lease agreements may contain clauses requiring restoration of the leased site at the end of the lease term,
creating an asset retirement obligation. Landlords may choose not to exercise these rights as cell sites are considered useful improvements. In addition to cell site operating leases, we have leases related to switch site, retail, and administrative
locations subject to the provisions of SFAS No. 143. We adopted SFAS No. 143 on January 1, 2003.



In November 2002, the EITF of the FASB reached consensus on EITF No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables.
This consensus requires that revenue arrangements with multiple deliverables be divided into separate units of accounting if the deliverables in the arrangement meet specific criteria. In addition, arrangement consideration must be allocated among
the separate units of accounting based on their relative fair values, with certain limitations. The sale of wireless service with an accompanying handset constitutes a revenue arrangement with multiple deliverables. We adopted the provisions of this
consensus for revenue arrangements entered into beginning after July 1, 2003. We have elected to apply the accounting provisions of EITF 00-21 on a prospective basis beginning July 1, 2003. As a result, we allocate amounts charged to customers
between the sale of handsets and the sale of wireless telecommunication services on a relative fair value basis. In most cases, this results in all amounts collected from the customer upon activation of the handset being allocated to the sale of the
handset. As a result of this treatment, activation fees included in the consideration at the time of sale are recorded as handset revenue. Prior to the adoption of EITF 00-21, we had deferred activation fee revenue and amortized these revenues over
the average life of our customers. The existing deferred revenue at July 1, 2003 continues to be amortized.



Reconciliation of Non-GAAP Financial Measures



We utilize certain financial measures that are not calculated in accordance with GAAP to assess our financial performance. A non-GAAP financial measure is
defined as a numerical measure of a companys financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in
accordance with GAAP in the statement of operations or statement of cash flows; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and
presented.



Adjusted earnings before interest, taxes,
depreciation and amortization or adjusted EBITDA, average revenue per user, or ARPU, and cost per gross addition, or CPGA, are an integrated set of non-GAAP financial measures utilized by our management to judge our operating performance. We believe
these measures are important in understanding the performance of our operations from period to period, and although every company in the wireless industry does not define each of these measures in precisely the same way, we believe that these
measures (which are common in the wireless industry) facilitate key operating performance comparisons with other companies in the wireless industry. The following tables reconcile our non-GAAP financial measures with our financial statements
presented in accordance with GAAP.



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We have presented adjusted EBITDA because this financial measure, in combination with other
GAAP and non-GAAP financial measures, is an integral part of our internal reporting system utilized by management to facilitate evaluation of our ability to meet future debt service, capital expenditure and working capital requirements and fund
future growth. Adjusted EBITDA is a supplement to GAAP financial information and should not be construed as an alternative to, or more meaningful than cash flows from operating activities, as determined in accordance with GAAP.



The following table reconciles adjusted EBITDA to net cash provided by
(used in) operating activities:



Adjusted
EBITDA



|                                                    |  |                         |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                    |  | Year Ended December 31, |        
|                                                    |  | 2001                    |         |   | 2002 |   |         | 2003 | 
|                                                    |  | (In thousands)          |        
|Calculation of Adjusted EBITDA:                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Net cash provided by (used in) operating activities |  | $                       | (32,401 | ) |      | $ | (64,523 | )    |  | $ | 109,618 |  
|Interest expense, net of interest income            |  |                         | 8,445   |   |      |   | 5,841   |      |  |   | 10,193  |  
|Bad debt expense                                    |  |                         |        |   |      |   | (381    | )    |  |   | (991    | )
|Accretion of asset retirement obligation            |  |                         |        |   |      |   |        |      |  |   | (50     | )
|Non-cash interest                                   |  |                         | (3,882  | ) |      |   | (3,028  | )    |  |   | (3,090  | )
|Deferred rents                                      |  |                         | (949    | ) |      |   | (1,853  | )    |  |   | (1,160  | )
|Cost of abandoned cell sites                        |  |                         |        |   |      |   |        |      |  |   | (824    | )
|Non-deferred tax                                    |  |                         |        |   |      |   | 8,993   |      |  |   | 1,643   |  
|Working capital changes                             |  |                         | 824     |   |      |   | (37,501 | )    |  |   | (19,832 | )
|                                                    |  |                         |         |   |      |   |         |      |  |   |         |  
|Adjusted EBITDA                                     |  |                         | (27,963 | ) |      |   | (92,452 | )    |  |   | 95,507  |  
|                                                    |  |                         |         |   |      |   |         |      |  |   |         |  



We believe average revenue
per user, or ARPU, is a useful measure to evaluate our per-customer service revenue realization and to assist in forecasting our future service revenues. ARPU is calculated exclusive of activation revenues, as these amounts are a component of our
costs of acquiring new customers and are included in our calculation of CPGA. ARPU is also calculated exclusive of E-911 charges, as these are generally pass through charges that we collect from our customers and remit to the appropriate government
agencies.



Average number of customers for any
measurement period is determined by dividing (a) the sum of the average monthly number of customers for the measurement period by (b) the number of months in such period. Average monthly number of customers for any month represents the sum of the
number of customers on the first day of the month and the last day of the month divided by two. The following table shows the calculation of ARPU for the periods indicated:



Average Revenue per User (ARPU)



|                                        |  |                                                            |         |   |      |   |         |  
|--------------------------------------- |  | ---------------------------------------------------------- | ------- | - | ---- | - | ------- | -
|                                        |  | Year Ended December 31,                                    |        
|                                        |  | 2002                                                       |         |   | 2003 |  
|                                        |  | (In thousands, exceptaverage number of customers and ARPU) |        
|Service revenues                        |  | $                                                          | 102,137 |   |      | $ | 370,920 |  
|Less: Activation revenues               |  |                                                            | (3,018  | ) |      |   | (14,410 | )
|E-911 charges                           |  |                                                            |        |   |      |   | (5,823  | )
|                                        |  |                                                            |         |   |      |   |         |  
|Net service revenues                    |  |                                                            | 99,119  |   |      |   | 350,687 |  
|                                        |  |                                                            |         |   |      |   |         |  
|Divided by: Average number of customers |  |                                                            | 210,881 |   |      |   | 775,605 |  
|                                        |  |                                                            |         |   |      |   |         |  
|ARPU                                    |  | $                                                          | 39.17   |   |      | $ | 37.68   |  
|                                        |  |                                                            |         |   |      |   |         |  



We
utilize CPGA to assess the efficiency of our distribution strategy, validate the initial capital invested in our customers and determine the number of months to recover our customer acquisition costs. This measure also



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provides a gauge to compare our average acquisition costs per new customer to those of other wireless communications providers. Activation revenues and
equipment revenues related to new customers are deducted form selling costs in this calculation as they represent amounts paid by customers at the time their service is activated which reduce our acquisition cost of those customers. Additionally,
equipment costs associated with existing customers, net of the related revenues, are excluded as this measure is intended to reflect only the acquisition costs related to new customers. The following table shows the calculation of CPGA for the
periods indicated:



Cost per Gross Addition (CPGA)



|                                                             |  |                                                         |         |   |      |   |         |  
|------------------------------------------------------------ |  | ------------------------------------------------------- | ------- | - | ---- | - | ------- | -
|                                                             |  | Year Ended December 31,                                 |        
|                                                             |  | 2002                                                    |         |   | 2003 |  
|                                                             |  | (In thousands, exceptgross customer additions and CPGA) |        
|Selling expenses                                             |  | $                                                       | 26,526  |   |      | $ | 44,076  |  
|Less:    Activation revenues                                 |  |                                                         | (3,018  | ) |      |   | (14,410 | )
|Less:    Equipment revenues                                  |  |                                                         | (23,458 | ) |      |   | (88,562 | )
|Plus:    Equipment revenue not associated with new customers |  |                                                         | 578     |   |      |   | 17,150  |  
|Plus:    Cost of equipment                                   |  |                                                         | 100,651 |   |      |   | 155,084 |  
|Less:    Equipment costs not associated with new customers   |  |                                                         | (2,050  | ) |      |   | (24,030 | )
|                                                             |  |                                                         |         |   |      |   |         |  
|Gross addition expenses                                      |  |                                                         | 99,229  |   |      |   | 89,308  |  
|                                                             |  |                                                         |         |   |      |   |         |  
|Divided by: Gross customer additions                         |  |                                                         | 626,050 |   |      |   | 894,348 |  
|                                                             |  |                                                         |         |   |      |   |         |  
|CPGA                                                         |  | $                                                       | 158.50  |   |      | $ | 99.86   |  
|                                                             |  |                                                         |         |   |      |   |         |  



Item 9A.Controls and Procedures



Disclosure Controls and Procedures



We maintain disclosure controls and procedures designed to insure that information required to be disclosed by us in the reports filed by us under the Securities Exchange Act of 1934, as amended, is accumulated and
communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure, and is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms.



In July 2003, during the preparation of quarterly financial statements, management noted that the balance of the deferred revenue accounts relative to service revenues had fluctuated from period to period in an inconsistent manner.
Management called this inconsistency to the attention of our auditors. In August 2003, prior to the time that MetroPCS, Inc. became a reporting company under the Exchange Act, management and our auditors noted a deficiency in our process related to
revenue reporting. Management and our auditors noted that the reconciliation of deferred revenue did not include all the appropriate accounts receivable and deferred revenue accounts, and was not prepared on a timely basis. In September 2003,
management concluded that we were understaffed in our revenue accounting function and that we did not have personnel with the appropriate experience required to properly account for activity resulting from the billing system.



Management immediately began to implement steps to improve the
capabilities and reliability of our financial and accounting systems in order to provide reasonable assurance that our financial statements would not contain a material misstatement. At that time, our Chief Financial Officer began devoting
substantial additional attention to our revenue accounting function in order to augment the Controllers increased focus on this area that had begun in July 2003. In September 2003, we hired a Director of External Reporting, which enabled our



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Controller to devote additional time to our revenue accounting function. In October 2003, we began a search for additional accounting personnel with relevant
training and experience in this area. Management believes the increased attention by our Chief Financial Officer and our Controller during the second half of 2003 was sufficient to remediate any understaffing in our revenue accounting function. In
December 2003, we hired a Vice President-Controller and a Director of Revenue Accounting, whose responsibilities include direct oversight and supervision of our revenue accounting function. These new personnel assumed their positions with us in
early January 2004.



In October 2003, in connection
with their review of our interim financial statements, our auditors issued a letter to us describing these deficiencies. In February 2004, in connection with the audit of our financial statements for the year ended December 31, 2003, our auditors
identified the lack of automation in the revenue reporting process as a material weakness in our internal controls over revenue reporting. The Public Company Accounting Oversight Board has defined material weakness as a significant
deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. This means that there is a risk
that a material misstatement in the deferred revenue accounts and the related service revenue accounts in our financial statements for a future period is reasonably possible.



In response to the lack of automation in our revenue reporting process, management made significant changes to our
manual calculation and reconciliation processes to insure proper revenue reporting, including implementation of the following procedures by the end of the third quarter of 2003:



| |  | a more timely and complete monthly reconciliation of accounts receivable balances provided by our billing system to the corresponding balances in our general ledger and the related
deferred revenue accounts;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | monthly comparative analyses of our balance sheet account and income statement account trends, and monthly actual-to-budget variance analyses of income statement accounts; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | monthly comparative analysis of revenues per customer compared to prior months and compared to budget, on both a market-by-market basis and a company-wide basis.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



Management evaluated the effectiveness
of these additional manual processes through the following:





| |  | monthly reconciliation of cash received to recorded service revenues and deferred revenues;
| | - | -------------------------------------------------------------------------------------------



| |  | analytical review and validation of financial, operating and liquidity measurements and their related trends against managements expectations based on managements
knowledge of operations. These financial and operating measurements included adjusted EBITDA, customer counts, activations and deactivations which are considered in the calculation of revenue, and revenue per subscriber measurements that are derived
from the revenue calculations;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | review of monthly and annual results compared to budget;
| | - | --------------------------------------------------------



| |  | review of the detailed reconciliation of the accounts receivable trial balance from the billing system to the appropriate accounts receivable and deferred revenue accounts in the
general ledger;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | inquiries of personnel preparing such reconciliations to insure these were comprehensive and included all appropriate accounts and all reconciling items were proper; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | analytical reviews of overall reconciliations of cash received to the recorded balances in service revenues and deferred revenue.
| | - | ---------------------------------------------------------------------------------------------------------------------------------



As a result of the additional manual processes and their evaluation by
management, management and our auditors identified and recorded adjustments to our deferred revenue and service revenues accounts during the course of the preparation of the financial statements for the related periods. These adjustments totaled
$110,000



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for the three months ended December 31, 2003, or 0.1% of service revenues and 1.2% of income from operations for such period. These additional manual
processes also resulted in reclassification entries on our balance sheet prior to its issuance to properly classify amounts between deferred revenue and other liability accounts related to taxes and other charges to customers.



Management believes that the implementation of these additional manual
processes, together with the recording of the resulting adjustments prior to issuance of the related financial statements, were sufficient to permit it to conclude that the material weakness in our internal controls over financial reporting, based
on a lack of automation in revenue reporting, had not resulted in a material misstatement of our financial statements.



Management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Because the material weakness relates primarily to the lack of automation
in the revenue reporting function, our Chief Executive Officer and our Chief Financial Officer were able to conclude that, as a result of the implementation of the manual processes and other procedures enumerated above, our disclosure controls and
procedures were effective at a reasonable assurance level as of December 31, 2003.



Management believes, and our auditors have advised us based on their review of our financial statements for the three months ended March 31, 2004, that the material weakness still exists due to the lack of automation
in our revenue reporting process. Remediation of the material weakness requires the automation of reports, including the development of reporting that details the deferred revenue balance and monthly service revenues on a customer-by-customer basis.
Remediation will also require automation of the transfer of information between our billing system and our general ledger, which is currently being performed manually. Development of these automated processes is currently ongoing. Although we intend
to eliminate the material weakness by December 31, 2004, we cannot assure you that we will be able to do so.



General Controls and Procedures



The following procedures were in place and performed throughout the year:



| |  | review of monthly financial reports and reconciliations with appropriate accounting and finance personnel. These reviews include a discussion of the results of operations, including
the validation of fluctuations in various line items in the financial statements;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | monthly review of financial and operating measurements with corporate management and market personnel;
| | - | ------------------------------------------------------------------------------------------------------



| |  | discussion of any known trends, events or uncertainties and information regarding market risk with appropriate level management personnel;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



| |  | review of all communications from internal auditors and our independent registered public accounting firm;
| | - | ----------------------------------------------------------------------------------------------------------



| |  | determination that adequate personnel resources were in place and proper assignment of such resources were made for the preparation of the annual report on Form 10-K; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | establishment of a disclosure committee comprised of executive management and key operating personnel in the fourth quarter of 2003.
| | - | ------------------------------------------------------------------------------------------------------------------------------------



Additionally, the following controls and procedures were established
prior to December 31, 2003, and were performed in conjunction with the December 31, 2003 year-end close process:



| |  | held meetings of the disclosure committee prior to the filing of the annual report on Form 10-K to review the completeness, adequacy and accuracy of disclosures;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | prepared a financial disclosure checklist to insure all applicable disclosures were adequately made; and
| | - | --------------------------------------------------------------------------------------------------------



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| |  | held meetings with the audit committee of the board of directors to discuss the results of operations and new accounting guidance, and to review the filing, including a discussion
of the disclosures and the material weakness.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The changes in our internal control over financial reporting discussed above that occurred during our fiscal quarter ended December 31, 2003 are reasonably likely to materially affect our internal control over
financial reporting.



Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



The following table sets forth information as of December 31, 2003 regarding the beneficial ownership of each class of our outstanding capital stock by:



| |  | each of our directors;
| | - | ----------------------



| |  | each named executive officer;
| | - | -----------------------------



| |  | all of our directors and executive officers as a group; and
| | - | -----------------------------------------------------------



| |  | each person known by us to beneficially own more than 5% of our outstanding shares of our Class A common stock, Class B common stock, Class C common stock or Series D preferred
stock.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Beneficial ownership is determined in
accordance with the rules of the SEC. Unless otherwise indicated below and except to the extent authority is shared by spouses under applicable law, to our knowledge, the persons named in the table have sole voting and investment power with respect
to all shares of each class or series of common stock and preferred stock shown as beneficially owned by them. The number of shares of Class B and Class C common stock used to calculate each listed persons percentage ownership of each such
class includes the shares of Class B and Class C common stock underlying options, warrants or other convertible securities held by such person that are exercisable on or before February 29, 2004. There are no currently outstanding options, warrants
or other convertible securities exercisable for shares of Class A common stock or Series D preferred stock. There were 180 shares of Class A common stock, 7,817,570 shares of Class B common stock, 65,365,806 shares of Class C common stock and
3,500,947 shares of Series D preferred stock outstanding as of December 31, 2003.



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|                                                                                                                                 |         |              |            |         |                 |        |           |            |      |          |        |            |            |      |   |        |         |            |      |  
|-------------------------------------------------------------------------------------------------------------------------------- | ------- | ------------ | ---------- | ------- | --------------- | ------ | --------- | ---------- | ---- | -------- | ------ | ---------- | ---------- | ---- | - | ------ | ------- | ---------- | ---- | -
|Name and Address of Beneficial Owner (1)                                                                                         |         | Common Stock |            |         | Preferred Stock |       
|                                                                                                                                 | Class A |              |            | Class B |                 |        | Class C   |            |      | Series D |       
|                                                                                                                                 | Number  |              | Percentage |         |                 | Number |           | Percentage |      |          | Number |            | Percentage |      |   | Number |         | Percentage |     
|Roger D. Linquist (2)                                                                                                            |         | 120          |            | 66.7    | %               |        | 8,173,500 |            | 51.5 | %        |        | 3,583,520  |            | 5.5  | % |        |        |            |     |  
|Malcolm M. Lorang (3)                                                                                                            |         |             |            |        |                 |        | 1,640,220 |            | 18.1 | %        |        | 77,080     |            | *    |   |        |        |            |     |  
|Dennis G. Spickler (4)                                                                                                           |         |             |            |       |                 |        | 1,230,000 |            | 14.1 | %        |        | 77,100     |            | *    |   |        |        |            |     |  
|Albert S. Loverde (5)                                                                                                            |         |             |            |       |                 |        | 1,079,332 |            | 12.4 | %        |        | 91,640     |            | *    |   |        |        |            |     |  
|J. Braxton Carter (6)                                                                                                            |         |             |            |       |                 |        |          |            |     |          |        | 165,000    |            | *    |   |        |        |            |     |  
|Corey A. Linquist (7)                                                                                                            |         |             |            |        |                 |        | 1,029,300 |            | 11.8 | %        |        | 41,820     |            | *    |   |        |        |            |     |  
|Robert A. Young (8)                                                                                                              |         |             |            |        |                 |        |          |            |     |          |        | 325,000    |            | *    |   |        |        |            |     |  
|C. Boyden Gray (9)                                                                                                               |         | 60           |            | 33.3    | %               |        | 323,340   |            | 4.1  | %        |        | 215,400    |            | *    |   |        |        |            |     |  
|John Sculley (10)                                                                                                                |         |             |            |       |                 |        | 593,340   |            | 7.4  | %        |        | 310,320    |            | *    |   |        | 5,050   |            | *    |  
|Joseph T. McCullen, Jr. (11)                                                                                                     |         |             |            |       |                 |        |         |            |    |          |        | 180,600    |            | *    |   |        | 10,000  |            | *    |  
|James F. Wade                                                                                                                    |         |             |            |        |                 |        |          |            |     |          |        |           |            |     |   |        |        |            |     |  
|Harry F. Hopper, III (12)                                                                                                        |         |             |            |        |                 |        |          |            |     |          |        | 180,600    |            | *    |   |        | 250,000 |            | 7.1  | %
|Arthur C. Patterson (13)                                                                                                         |         |             |            |        |                 |        | 3,300,000 |            | 42.9 | %        |        | 16,924,260 |            | 25.9 | % |        | 439,866 |            | 12.6 | %
|Accel Partners, et al (14) 428 University Ave. Palo Alto, CA 94301                                                               |         |             |            |       |                 |        | 3,300,000 |            | 42.9 | %        |        | 16,743,660 |            | 25.7 | % |        | 439,866 |            | 12.6 | %
|Battery Ventures III, L.P. (15) 20 William Street, Suite 200 Wellesley, MA 02481                                                 |         |             |            |       |                 |        | 1,650,000 |            | 21.5 | %        |        | 6,111,540  |            | 9.4  | % |        |        |            |     |  
|Clarity Partners (16) 100 North Crescent Dr. Beverly Hills, CA 90210                                                             |         |             |            |        |                 |        |          |            |     |          |        |           |            |     |   |        | 266,220 |            | 7.6  | %
|Columbia Capital, et al (17) 201 North Union Street, Suite 300 Alexandria, VA 22314                                              |         |             |            |        |                 |        |          |            |     |          |        | 180,600    |            | *    |   |        | 250,000 |            | 7.1  | %
|General Motors Pension Fund (18) 767 Fifth Avenue, New York, NY 10153                                                            |         |             |            |       |                 |        |          |            |    |          |        | 12,960,960 |            | 17.9 | % |        | 100,000 |            | 2.9  | %
|INVESCO Investors (19) c/o Parag Saxena, 1166 Avenue of the Americas, New York, NY 10036                                         |         |             |            |       |                 |        |         |            |    |          |        | 4,799,790  |            | 7.2  | % |        | 16,464  |            | *    |  
|Los Angeles County Employee Retirement Association (20) c/o Pathway Capital Management, 5 Park Plaza, Suite 300 Irvine, CA 92614 |         |             |            |        |                 |        |          |            |     |          |        | 5,071,800  |            | 7.6  | % |        |        |            |     |  
|M/C Venture Partners, et al (21) 75 State Street Boston, MA 02109                                                                |         |             |            |        |                 |        |          |            |     |          |        | 180,600    |            | *    |   |        | 830,000 |            | 23.7 | %
|Metro PCS Investors LLC (22) 360 North Crescent Dr., North Bldg. Beverly Hills, CA 90210                                         |         |             |            |        |                 |        |          |            |     |          |        |           |            |     |   |        | 266,220 |            | 7.6  | %
|Mitsui & Co., Ltd. (23) 200 Park Avenue New York, NY 10166,                                                                      |         |             |            |       |                 |        |         |            |    |          |        | 5,040,000  |            | 7.7  | % |        |        |            |     |  
|Technology Ventures (24) Associates III 135 E. Putnam Ave., Greenwich, CT 06830                                                  |         |             |            |       |                 |        |         |            |     |          |        | 3,729,600  |            | 5.7  | % |        | 200,010 |            | 5.7  | %
|Wachovia Capital Partners (25) One First Union Center 301 South College St. Charlotte, NC 28288                                  |         |             |            |        |                 |        |          |            |     |          |        |           |            |     |   |        | 250,000 |            | 7.1  | %



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|                                                             |         |              |            |         |                 |        |            |            |      |          |        |            |            |      |   |        |           |            |      |  
|------------------------------------------------------------ | ------- | ------------ | ---------- | ------- | --------------- | ------ | ---------- | ---------- | ---- | -------- | ------ | ---------- | ---------- | ---- | - | ------ | --------- | ---------- | ---- | -
|Name and Address of Beneficial Owner (1)                     |         | Common Stock |            |         | Preferred Stock |       
|                                                             | Class A |              |            | Class B |                 |        | Class C    |            |      | Series D |       
|                                                             | Number  |              | Percentage |         |                 | Number |            | Percentage |      |          | Number |            | Percentage |      |   | Number |           | Percentage |     
|Whitney & Co., LLC (26) 177 Broad Street Stamford, CT 06901  |         |             |            |        |                 |        |           |            |     |          |        |           |            |     |   |        | 250,000   |            | 7.1  | %
|All directors and executive officers as a group (15 persons) |         | 180          |            | 100.0   | %               |        | 17,369,032 |            | 83.7 | %        |        | 22,582,940 |            | 33.8 | % |        | 1,534,916 |            | 43.9 | %

---

|* | Represents less than 1%
|- | -----------------------

|(1) | Unless otherwise indicated, the address of each person is c/o MetroPCS, Inc., 8144 Walnut Hill Lane, Suite 800, Dallas, Texas 75231.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes 8,173,500 shares of Class B common stock and 109,400 shares of Class C common stock issuable upon exercise of options granted under our stock option plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes 1,359,900 shares of Class B stock and 40,600 shares of Class C stock issuable upon exercise of options granted under our stock option plan.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes 1,020,000 shares of Class B common stock and 52,800 shares of Class C common stock issuable upon exercise of options granted under our stock option plan.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes 996,000 shares of Class B common stock and 44,600 shares of Class C common stock issuable upon exercise of options granted under our stock option plan.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Includes 165,000 shares of Class C common stock issuable upon exercise of options granted under our stock option plan.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(7) | Includes 1,029,300 shares of Class B common stock and 35,700 shares of Class C common stock issuable upon exercise of options granted under our stock option plan.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Includes 325,000 shares of Class C common stock issuable upon exercise of options granted under our stock option plan.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(9) | Includes 143,340 shares of Class B common stock and 180,600 shares of Class C common stock issuable upon exercise of options granted under our stock option plan. Also includes
60,000 shares of Class B common stock and 7,680 shares of Class C common stock issuable upon exercise of outstanding warrants.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Includes 143,340 shares of Class B common stock and 180,600 shares of Class C common stock issuable upon exercise of options granted under our stock option plan. Also includes
150,000 shares of Class B common stock and 45,060 shares of Class C common stock issuable upon exercise of outstanding warrants.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Includes 130,433 shares of Class C common stock issuable upon exercise of options granted under our stock option plan.
|---- | ----------------------------------------------------------------------------------------------------------------------

|(12) | Mr. Hopper is affiliated with Columbia Capital Equity Partners III (QP) LP, Columbia Capital Equity Partners III (Cayman) LP, Columbia Capital Equity Partners III (AI) LP, Columbia
Capital Investors III, LLC, and Columbia Capital Employee Investors III, LLC and may be deemed to be a member of a group (hereinafter referred to as Columbia Capital, et al) under Section 13d-3 of the Exchange Act and may be deemed to
share voting and/or investment power with respect to the shares owned by such entities. Mr. Hopper disclaims beneficial ownership of such shares, except to the extent of his interest in such shares arising from his interests in Columbia Capital, et
al.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | Includes 180,600 shares of Class C common stock issuable upon exercise of options granted to Mr. Patterson under our stock option plan. In addition, Mr. Patterson is affiliated with
Accel Internet Fund III, LP, Accel Investors 94 LP, Accel Investors 99 LP, Accel IV LP, Accel Keiretsu LP, Accel VII LP, ACP Family Partnership LP, Ellmore C. Patterson Partners, and Prosper Partners and may be deemed to be a member of a
group (hereinafter referred to as Accel Partners, et al) under Section 13d-3 of the Exchange Act and may be deemed to share voting and/or investment power with respect to the shares owned by such entities. Mr. Patterson disclaims
beneficial ownership of such shares, except to the extent of his interest in such shares arising from his interests in Accel Partners, et al.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(14) | Accel Partners, et al (consisting of Accel Internet Fund III, LP (54,614 shares of Series D preferred stock), Accel Investors 94 LP (741,720 shares of common stock), Accel
Investors 99 LP (27,007 shares of Series D preferred stock), Accel IV LP (18,360,000 shares of common stock), Accel Keiretsu LP (371,000 shares of common stock), Accel VII LP (218,458 shares of Series D preferred stock), ACP Family Partnership
LP (100,040 shares of Series D preferred stock), Ellmore C. Patterson Partners (440,880 shares of common stock and 39,866 shares of Series D preferred stock), and Prosper Partners (120,060 shares of common stock)) may be deemed to be a
group under Section 13d-3 of the Exchange Act. Accel IV L.P. is a limited partnership in which Accel IV Associates L.P. is the sole general partner. Accel Keiretsu L.P. is a limited partnership in which Accel Partners & Co., Inc. is
the sole general partner. Arthur C. Patterson and James R. Swartz are co-owners and officers of Accel Partners & Co., Inc., and James W. Breyer is an officer. Accel Investors 94 L.P. is a limited partnership in which Arthur C. Patterson,
James R. Swartz, Paul H. Klingenstein, and James W. Breyer are the general partners. Accel VII L.P. is a limited partnership in which Accel VII Associates L.L.C. is the sole general partner. Accel Internet Fund III L.P. is a limited partnership in
which Accel Internet Fund III Associates L.L.C. is the sole general partner. Ellmore C. Patterson Partners is a partnership in which Arthur C. Patterson is the sole general partner. Prosper Partners is a partnership for which Paul H. Klingenstein is
Attorney in Fact. ACP Family Partnership L.P. is a limited partnership in which Arthur C. Patterson is the sole general partner. Each beneficial owner of the shares disclaims beneficial ownership except to the extent of their pecuniary interest
therein.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(15) | Battery Partners III, L.P. is the general partner of Battery Ventures III, L.P. The general partners of Battery Partners III, L.P. are Richard D. Frisbie, Oliver D. Curme,
Howard Anderson, Thomas J. Crotty, Kenneth P. Lawler and Todd A. Dagres, which individuals may be deemed to have shared beneficial ownership of these shares.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(16) | Clarity Partners, LP, is a limited partnership controlled by Clarity GenPar, LLC, its general partner. Clarity GenPar, LLC, a limited liability company, has sole voting and
investment power with respect to the shares held by Clarity Partners, LP.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(17) | Columbia Capital, et al (consisting of Columbia Capital Equity Partners III (QP) LP (95,164 shares of Series D preferred stock), Columbia Capital Equity Partners III (Cayman) LP
(73,925 shares of Series D preferred stock), Columbia Capital Equity Partners III (AI) LP (7,425 shares of Series D preferred stock), Columbia Capital Investors III, LLC (33,225 shares of Series D preferred stock), and Columbia Capital Employee
Investors III, LLC (40,261 shares of common stock) may be deemed to be a group under Section 13d-3 of the Exchange Act. Includes 180,600 shares of common stock issuable upon exercise of options granted under our 1995 stock option plan.
Mr. Hopper is a Managing Member of Columbia Capital III, L.L.C, the general partner of Columbia Capital Equity Partners III, L.P., which is the general partner of Columbia Capital Equity Partners III (QP), L.P., Columbia Capital Equity Partners III
(Cayman), L.P., and Columbia Capital Investors III, L.L.C. and Columbia Capital Employee Investors III, L.L.C., and may be deemed to share voting and investment power with respect to all shares held by those entities. Mr. Hopper disclaims beneficial
ownership of such shares except to the extent of his pecuniary interest, if any, therein.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(18) | Includes 7,098,780 shares of Class C common stock issuable upon exercise of outstanding warrants. Kane & Co. holds these shares of common stock as nominee for First Plaza Group
Trust. JP Morgan Chase Bank is the trustee for First Plaza Group Trust.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(19) | INVESCO is the investment advisor to a number of our stockholders, and has investment and voting power over the shares owned by such stockholders. These stockholders include (i)
Drake & Co., as nominee for Citiventure Private Partners III Ltd., (ii) Michael A. Wall, (iii) Northpass & Co., as custodian for KME Venture III L.P., (iv) Cheer Idyll Property Ltd., (v) Drake & Co., as nominee for Shirley Wong Shun Yee,
(vi) Leckwith Property Ltd., (vii) Trendly Investments, and (viii) Evermore Corp. Mr. Parag Saxena, our former director, is affiliated with INVESCO, and both he and INVESCO may be deemed to have voting and/or investment power with respect to the
shares owned by such investors. INVESCO and Mr. Saxena disclaim beneficial ownership of such shares. Includes an aggregate of 1,612,170 shares of Class C common stock issuable upon exercise of outstanding warrants.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(20) | Includes 1,601,280 shares of Class C common stock issuable upon exercise of outstanding warrants.
|---- | -------------------------------------------------------------------------------------------------

|(21) | M/C Venture Partners, et al (consisting of M/C Venture Investors, LLC, M/C Venture Partners IV, LP, M/C Venture Partners V, LP, and Chestnut Venture Partners LP) may be deemed to be
a group under Section 13d-3 of the Exchange Act. Includes an aggregate of 180,600 shares of Class C common stock issuable upon exercise of options granted under to our stock option plan.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(22) | MetroPCS Investors, LLC is a single member limited liability company owned by PCG Tagi (Series E), LLC, PCG Tagi (Series E), LLC is controlled by GKW Unified Holdings, LLC, which is
a member-managed limited liability company. The members of GKW Unified Holdings, LLC are Dr. Philip Levine, as trustee of the Winbro One Irrevocable 1998 Irrevocable Trust, the Winbro Two Irrevocable 1998 Trust and the Winbro Three Irrevocable 1998
Trust, and Gary and Karen Winnick.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(23) | Includes Mitsui & Co. (U.S.A.), Inc., an affiliate of Mitsui & Co., Ltd. Includes 240,000 shares of Class C common stock issuable upon exercise of outstanding warrants.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(24) | Technology Venture Associates III, L.P. is a limited partnership in which Craig R. Stapleton is the sole General Partner.
|---- | -------------------------------------------------------------------------------------------------------------------------

|(25) | Wachovia Capital Partners 2001, LLC is a limited liability company in which Wachovia Investors, Inc. is the sole member and WCP Management Company 2001, LLC is its Manager.
Scott B. Perper is Senior Vice President and Managing Partner of Wachovia Capital Partners 2001, LLC Managing Member and Senior Vice President of WCP Management Company 2001, LLC and Senior Vice President of Wachovia Investors Inc.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(26) | Includes 211,296 shares of common stock held by Whitney V, L.P. and 39,005 shares of common stock held by J.H. Whitney IV, L.P. The general partner of Whitney V, L.P. is Whitney
Equity Partners V, LLC, the managing members of which are Peter M. Castleman, Michael R. Stone, William Laverack, Jr. Daniel J. OBrien, John C. Hockin, Steven E. Rodgers, Paul R. Vigano and Robert M. Williams, Jr. The general partner of J.H.
Whitney IV, L.P. is J.H. Whitney Equity Partners IV, L.L.C., the managing members of which are Peter M. Castleman, Michael R. Stone, William Laverack, Jr., and Daniel J. OBrien.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Equity Compensation Plan Information



Information concerning securities authorized for issuance under our equity compensation plan is set forth in Item 5 of this Form 10-K and is incorporated in Item 12 of this Form 10-K by reference.



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PART IV



Item 15.Exhibits, Financial Statement Schedules and Reports on Form 8-K



|(a) | Financial Statements, Schedules and Exhibits
|--- | --------------------------------------------



|(3) | Exhibits
|--- | --------



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|            |  |                                                                                                                                                                      
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                          
|            | 
|31.1*       |  | Certification of Roger D. Linquist, President and Chief Executive Officer of MetroPCS, Inc., as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   
|            | 
|31.2*       |  | Certification of J. Lyle Patrick, Vice President and Chief Financial Officer of MetroPCS, Inc., as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

---

|* | Filed herewith.
|- | ---------------



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SIGNATURES



Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



METROPCS, INC. (Registrant)By:

/s/ Roger D. LinquistRoger D. Linquist President, Chief Executive Officer, Secretary and Chairman of the BoardDate: July 27, 2004By:

/s/ J. Lyle PatrickJ. Lyle Patrick Vice President and Chief Financial OfficerDate: July 27, 2004




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