T-Mobile’s offer to pay consumer ETFs resulted in 1.3 million new branded, postpaid subscribers, but a $151 million loss.
T-Mobile hinted at a killer first quarter and on May 1 it delivered
, announcing the addition of 2.4 million customers.
More than 1.3 million of the new customers were branded, postpaid subscribers, and 1.2 million of those were phone customers. To new and existing customers, T-Mobile sold 6.9 million smartphones during the quarter.
Not only was this T-Mobile’s first time ever adding more than 2 million customers, and its fourth consecutive quarter of adding more than 1 million customers—something that would have been unthinkable a year and a half ago—but it left its competitors in the dust.
During their respective first quarters, Verizon added
549,000 net retail connections and AT&T added
just over 1 million, but Sprint lost
a combined 595,000 postpaid and prepaid subscribers.
“In true Un-carrier fashion,” T-Mobile CEO John Legere said during the morning earnings call, using the marketing term T-Mobile has created for its business outlook, “we didn’t just break one record, we shattered a slew of them,”
T-Mobile captured nearly all of the industry phone growth, as well as subscribers from each of its tier-one rivals, Legere said, adding, “Our postpaid, branded net additions outperformed our nearest competitor by a multiple of 12 times.”
Much of this growth likely came, thanks to T-Mobile’s offer to pay the early termination fees
(ETFs), up to $650 per line, of anyone wanting to switch from Verizon, AT&T or Sprint to T-Mobile.
The flipside of droves of people accepting this offer was an earnings (before interest, taxes, depreciation and amortization) drop of 12.2 percent quarter-over-quarter to $1.1 billion, resulting in a loss of $151 million. According to Legere, the loss is calculated and worthwhile, as the customers who are coming over have strong credit, are buying bigger buckets of data and are staying longer.
Total revenue was $6.88 billion, increasing by 15.3 percent year-over-year (or by 47 percent, when taking MetroPCS results into account) and 0.7 percent quarter-over-quarter.
T-Mobile Still Taking on Tablets
A year ago, T-Mobile began focusing on the “the biggest problem in the industry,” which was smartphones. Now, said Chief Marketing Officer Mike Sievert, “we’re finally getting around to tablets.”
On April 10, T-Mobile introduced Operation Tablet Freedom
, offering LTE-enabled tablets at what had been WiFi-enabled prices, alongside an offer of 1GB of free LTE each month through the end of the month and a “for-life” offer of 200MB of free data each month.
During the first quarter, it sold nearly 67,000 tablets, a figure substantially below its competitors’ tablet additions. (AT&T, for example, added 313,000 branded tablets during its first quarter.)