T-Mobile Pleases Wall Street by Courting More Customers

October 24, 2016, 12:46 PM UTC
Inside The T-Mobile US Inc. Un-Carrier X Event
John Legere, chief executive officer of T-Mobile US Inc., streams Periscope on an Apple Inc. iPhone ahead of the T-Mobile Un-Carrier X event in Los Angeles, California, U.S., on Tuesday, Nov. 10, 2015. Legere, poking at larger rivals Verizon Communications Inc. and AT&T Inc., unveiled the Binge On feature that lets subscribers watch videos from selected providers including Verizon's go90 service without having to pay extra in data charges. Photographer: Patrick T. Fallon/Bloomberg via Getty Images
Photograph by Bloomberg — Getty Images

T-Mobile US reported a better-than-expected quarterly profit and raised its forecast for customer additions for the year as heavy discounting helped attract subscribers.

Shares of the company, controlled by Deutsche Telekom, were up 3.5% at $48.40 in premarket trading on Monday.

The company said it now expected to add 3.7 million to 3.9 million branded postpaid customers on a net basis this year, compared with its previous forecast of 3.4 million to 3.8 million.

The Bellevue, Wash.-based company added 969,000 postpaid customers in the third quarter ended Sept. 30, up from 890,000 in the second quarter.

T-Mobile (TMUS) and Sprint (S), have been grabbing market share by gaining subscribers from bigger rivals AT&T and Verizon Communications.

AT&T (T), which has proposed to buy Time Warner (TWX) for $85.4 billion, lost 268,000 wireless phone postpaid customers in its third quarter.

Verizon (VZ) added postpaid subscribers significantly below analysts’ estimate for the third quarter.

T-Mobile said it benefited from the launch of the iPhone 7 in the quarter and an increase in branded prepaid customer migrations to postpaid plans.


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However, churn, or the rate at which users switch to other networks, increased to 1.32% from 1.27% in the prior quarter.

On an adjusted basis, the company earned 27 cents per share, according to Thomson Reuters (TRI) calculation, beating the average analyst estimate of 22 cents per share.

T-Mobile’s net income rose to $366 million, or 42 cents per share, in the third quarter from $138 million, or 15 cents per share, a year earlier.

Net income in the quarter included after-tax spectrum gains of $122 million.

Total revenue rose 17.8% to $9.2 billion.

Up to Friday’s close, the stock had risen nearly 20% this year.


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