T-Mobile Sacrifices Costs for Customers
T-Mobile's "uncarrier" moves paid off in the first customer as it managed to add 2.4 million new customers, including 1.3 million postpaid subscribers. But the additions came at a cost.
T-Mobile US Inc. lost $151 million, or 19 cents a share in the first quarter, as it stepped up its promotional efforts, compared to a $106 million profit at 20 cents a share in the year-earlier quarter. Its shares, however, were up 7.5% to $31.50 in early market trading on Thursday.
The share climb was a reflection of the net additions, as well as the revenue bump T-Mobile received from closing its purchase of contract-free operator MetroPCS. Revenue in the first quarter grew 47% to $6.9 billion. Without MetroPCS's results in the mix, revenue would have risen 19%. T-Mobile also managed to add 465,000 prepaid customers with help from MetroPCS.
The first quarter was T-Mobile's fourth consecutive quarter with over 1 million net additions, and the first time it's ever passed the 2 million mark. It was clear from Verizon Wireless and Sprint Corp. (NYSE: S)'s earnings last week that the promotional moves in the market being made by the self-proclaimed "uncarrier" were having an effect. Only AT&T Inc. (NYSE: T), its biggest target, has yet to feel the squeeze. (See Sprint: LTE TDD Speed Boost Coming Soon, Verizon Loses Its Postpaid Net Add Crown, and AT&T Gets 81% of Subs Off Unlimited Data.)
T-Mobile is now approaching 50 million customers, closing the gap on potential merger partner Sprint, which ended the first quarter with 54 million customers. T-Mobile says it plans to add 2.8 to 3.3 million branded contract customers by the end of the year. (See T-Mobile Pours Cold Water on Sprint's Spark.)
— Sarah Reedy, Senior Editor, Light Reading