updated 08:19 am EDT, Thu May 1, 2014
Aggressive T-Mobile customer growth costs carrier dearly
T-Mobile's achieved its best quarter for customer growth, with the net 2.4 million new subscribers marking the first time it has gained more than 2 million customers in a three-month period, the company revealed in its first quarter results. The growth comes at a cost, with the carrier posting a loss of $151 million for the quarter, a reversal of the $106 million profit it earned in the same quarter last year.
Total revenues for the period reached $6.9 billion, up from the $6.8 billion in the previous quarter, and a jump from the $5.9 billion last year, though the figure also includes MetroPCS revenue. Service revenues also marginally increased in comparison to both periods, resting at $5.3 billion.
T-Mobile president and CEO John Legere
The increased customer growth includes 1.8 million total postpaid customers and 465,000 prepaid, with branded postpaid additions hitting 1.3 million. In comparison, T-Mobile lost 199,000 branded postpaid subscribers in the first quarter of 2013. The growth is not only aggressive compared to T-Mobile's past performance, but also against its competitors. Verizon and AT&T added 549,000 and 1 million subscribers respectively in the quarter, while Sprint reported it lost 595,000.
Smartphone sales, including those to branded postpaid and prepaid customers, reached 6.9 million units in the quarter, making up 92 percent of total devices sold. The company's Value and Simple Choice plans continue to be adopted by its subscribers, with the plans being used by 75 percent of the T-Mobile postpaid customer base at the end of the quarter, up from 69 percent at the end of the previous period. T-Mobile's outlook guidance for 2014 suggests the growth and rate plan migrations could push the figure to between 85 percent and 90 percent before the end of this year.
President and CEO John Legere puts the results down to changes made by T-Mobile against an "arrogant US wireless industry" with its Un-carrier initiatives. "We are now approaching 50 million customers, added 2.4 million net new customers in the first quarter alone, and posted our fourth quarter of consecutive service revenue growth, while once again adding more net new postpaid customers than the rest of the industry combined!"