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.
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