Mobile services

T-Mobile Beats Customer Growth Targets

T-Mobile US made a habit of smashing its targets for customer growth in 2014, and it appears to have ended the year in style, adding another 1.3 million postpaid customers in the fourth quarter, according to a results preview published on Wednesday.

The operator needed to capture between 700,000 and 1.1 million postpaid customers in the quarter to achieve its goal of adding between 4.3 million and 4.7 million in 2014.

Majority owned by Germany's Deutsche Telekom AG (NYSE: DT), T-Mobile US Inc. had started 2014 with the aim of adding another 2 to 3 million postpaid customers by the end of the year, but this target was jacked up as consumers raced to adopt its low-cost deals.

The strong fourth-quarter performance means the operator managed to add 4.9 million postpaid customers in 2014 and 8.3 million subscribers in total.

That's a remarkable improvement on the 2 million postpaid subscribers and 4.4 million customers it added in 2013.

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John Legere, the operator's perennially upbeat CEO, has continued to brag about T-Mobile's "porting ratios" -- indicating how many customers are joining its network from those of its bigger rivals -- and he could not resist having another dig at his competitors in his latest statement.

"Porting ratios have been in our favor versus the competition for seven consecutive quarters and it looks like we will continue to beat everyone on total postpaid phone adds as well," he said.

Shedding more light on porting, T-Mobile claimed to have seen a "positive postpaid porting ratio" of 1.4 versus Verizon Wireless , 1.8 versus AT&T Inc. (NYSE: T) and 2.2 versus Sprint Corp. (NYSE: S).

Legere remains confident that T-Mobile will soon "officially" overtake Sprint to become the country's third-biggest mobile operator on the basis of customer numbers.

"We won’t know where things stand until we get the final score after we both report Q4 earnings, but whether it is now -- or soon -- I’m telling you, it’s a done deal," he wrote in a blog on T-Mobile's website.

Even so, T-Mobile has been criticized for prioritizing customer growth over profitability, its net loss having widened to $94 million in the third quarter of 2014 from $36 million in the same period of 2013.

While easily beating subscriber growth targets, it has already conceded that 2014 earnings are likely to come in at the lower end of expectations, having predicted it will generate between $5.6 billion and $5.8 billion in earnings before interest, taxation, depreciation and amortization (EBITDA).

Moreover, just as customer growth targets have been raised, so earnings ambitions have been lowered -- T-Mobile started 2014 with the aim of making between $5.7 and $6 billion in EBITDA.

Although some analysts have accused T-Mobile of being too cautious in setting customer growth targets, net additions fell from nearly 1.4 million in the third quarter to the figure of 1.3 million in the fourth as AT&T, Verizon and Sprint fought back with promotions of their own. (See AT&T Revives Its 'Rollover' for the Data Era .)

Legere insists T-Mobile has not started a price war and has found the right balance between growth and profitability, but his strategy is likely to come under even greater scrutiny in the months ahead.

— Iain Morris, News Editor, Light Reading

Mitch Wagner 1/8/2015 | 11:21:14 AM
Race to the bottom Stealing customers from competitors is a race to the bottom. The key to growth is selling people on new services. 

T-Mobile has been dead to me since it stopped using Catherine Zeta-Jones as spokeswoman.
lsutigers 1/8/2015 | 12:38:28 AM
Re: Deutsche Telekom pressure According to several reports, T-Mobile has the fastest network in the US. However, the difference is not much and the other carriers are not standing still. Verizon recently launched XLTE and Sprint is aggressively deploying Spark tri-band LTE. I have personally tested both Sprint and Verizon's enhanced LTE networks and can tell you in 2015 the tables will turn in terms of speeds. I use Verizon as my personal carrier and XLTE speeds average around 40-60mbps and use a Sprint iPhone 6 provided by my employer which supports Sprint Spark with average speeds of 40-75mbps. Sprint is also deploying the latest 8T8R radios and network tech on its 2.5ghz band which will allow it to bond multiple 20mhz channels using LTE Advanced Carrier Aggregation to achieve speeds of 180mbps by the end of this year. Additionally, the other problem with T-Mobile is lack of coverage outside of major metros and interstate highways. The big 3 carriers are way ahead of them in terms of coverage. Although T-Mobile is purchasing 750mhz spectrum to improve in-building coverage, Sprint is already deploying LTE on it's refarmed 800mhz Nextel spectrum which improved in-building coverage exponentially. Sprint has also announced they will be participating in the upcoming 600mhz spectrum auction to further enhance coverage. So, the bottom line is that while T-Mobile has done a great job at adding subs, most have been low value subs and its main issue with lack of coverage is still a problem. The few people I know with T-Mobile like the service when it works while they're in the city, but as soon as they travel to the suburbs or rural areas they either drop to 2G coverage or lose service altogether. We shall see what happens this year but 2015 is shaping up to be an interesting year to follow wireless telcos.
lsutigers 1/8/2015 | 12:22:33 AM
Re: Deutsche Telekom pressure This all comes at a huge cost to T-Mobile, a company it's parent DT has been looking to offload for some time. You can't continue to add subscribers while giving away the farm and constantly losing money. At some point DT will say enough is enough if they don't become profitable or until the first suited buyer comes along. It would have been great to see Sprint buy out T-Mobile to be able to better compete with the AT&T/Verizon duopoly. Hopefully the FCC will reconsider allowing the merger.
danielcawrey 1/7/2015 | 8:15:36 PM
Re: Deutsche Telekom pressure Just because people join that doesn't mean they are happy with the service. 

I think T-Mobile's network is slow, and it causes its phones to operate slowly. When compared with Verizon, there is a difference. Covergae is a big factor too. How these companies compete with one another should be about the service, and not the number of ports. 
mhhf1ve 1/7/2015 | 3:47:52 PM
waiting to see how much spectrum T-mo will get in the recent FCC auction Will T-mo get more spectrum to support all these new customers (and get better indoor coverage as well)? We'll see after the FCC auction is over if T-mo has gained the spectrum it wants/needs to keep these new users happy with a "data strong" network.
iainmorris 1/7/2015 | 1:54:24 PM
Deutsche Telekom pressure Big question is whether Deutsche Telekom will put pressure on T-Mobile to rein in those Un-carrier activities - in the interests of profitability - over the next few months. 
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