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T-Mobile Adds 1.5M Net Customers, Closing On Sprint’s No. 3 Spot

Thu, 07/31/2014 - 10:07am
Ben Munson

T-Mobile today announced it added a net 1.5 million customers during its second quarter, making it five consecutive quarters with over one million net customer additions.

Branded postpaid net customer adds amounted to 908,000, with 579,000 phone net additions and 329,000 mobile broadband net additions, which the carrier said were mostly tablets. The large flock of new customers came along with 1.5 percent churn, holding steady both quarterly and annually.

With the recent reports from Verizon, AT&T and Sprint putting varying degrees of emphasis on postpaid tablet growth, T-Mobile downplayed its own tablet adds. The carrier opted for a new metric focused squarely on postpaid phone adds and even accused its competitors of hiding behind tablet adds.

With the fresh quarterly additions, T-Mobile puts its total customer base at 50.5 million at the end of its second quarter. For Sprint, which yesterday posted quarterly results and revealed an updated subscriber base of 53 million, the space between the fourth and third largest U.S. carriers has to be getting uncomfortably close.

Though the net 220,000 subscriber losses Sprint posted represents an improvement for the carrier, it’s still significant. If both Sprint and T-Mobile maintain their current rates of subscriber growth/loss, it’s fair to imagine that T-Mobile will become the third largest carrier, in terms of customers, by the end of 2014. 

Providing guidance for 2014, T-Mobile updated its forecast to 3-3.5 million net branded postpaid adds for the full year. Having already done 2.2 million this year, CEO John Legere admitted that the guidance for the back half of 2014—amounting to about 1.3 million new net customer adds—is conservative.

Of course, if the rumored merger between Sprint and T-Mobile gets off the ground, T-Mobile could be in place to nearly double its subscriber base.

But Legere reiterated the organic growth stemming the T-Mobile’s Un-carrier moves, praising the sustainability he sees in that business model, and said there are plenty of options for inorganic growth.

“We have multiple versions of things we can do inorganically,” Legere said in a morning earnings call.

Part of that involves continuing to go after spectrum. Legere said his company has been successful in rounding up AWS spectrum for its wideband LTE aspirations but that it still wants more spectrum and is looking forward to both the AWS and 600 MHz auctions.

“We plan to be successful in both auctions,” Legere said.

With the first of those costly auctions coming in the next few months, T-Mobile is experiencing timely profit growth. The carrier posted an adjusted EBITDA of $1.45 billion, representing 33.4 percent growth quarterly. Service revenues jumped 15.3 percent annually on branded postpaid revenues and from T-Mobile tossing in the MetroPCS results. But with customers flocking to Simple Choice plans, T-Mobile experienced a 2.3 percent quarterly drop in ARPU, to $49.32.

T-Mobile stock is up nearly one percent as of 8:49 a.m. CT.

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