T-Mobile's Strong Q4 Growth Came at the Price of $20 Million Loss

 
 
By Michelle Maisto  |  Posted 2014-02-25 Email Print this article Print
 
 
 
 
 
 
 

T-Mobile added 1.6 million customers during the fourth quarter and 4.4 million during the whole of 2013. But they didn't come cheap.

T-Mobile's "Un-carrier" strategy is working, the carrier said Feb. 25, announcing the results of its 2013 fourth-quarter and full-year overview. During the quarter, T-Mobile added more than 1.5 million customers, 869,000 of whom are "branded postpaid" customers. For the full year 2013, T-Mobile added 4.4 million customers. 

Comparatively, during full-year 2012, T-Mobile added 1 million customers, and during the fourth quarter of 2011 alone, it lost 706,000 customers.

"We're now the fastest-growing wireless company," said CEO John Legere, more subdued than usual, during an earnings call that took place at 6 a.m. Bellevue, Wash., time.

But T-Mobile's growth under Legere is coming at a cost. While revenue increased 39 percent year-over-year to $6.8 billion, the carrier posted a loss of $20 million, widening the loss from $8 million a year ago.

"We delivered significant growth in a fiscally responsible way," said Legere. "We showed we have strong cost discipline across the whole business."

T-Mobile has provoked the industry into action with its Un-carrier deals, which it began offering in March, when it announced that it was separating devices from service plans, dropping two-year service contracts and offering interest-free, monthly device financing.

Most recently, it began offering to pay as much as $650 a line, covering the early termination fees of anyone who wanted to "break up" with AT&T, Verizon or Sprint and get together with T-Mobile.

Between the third and fourth quarters of 2013, T-Mobile's cost per gross addition (CPGA) for each "branded" customer (versus those who join the network through T-Mobile-backed MVNO, or mobile virtual network operator, brands) increased by $10, to $317.

T-Mobile executives insisted that the price is worth it, particularly since the customers that are leaving AT&T for T-Mobile are "prime" customers, with great credit histories.

"The quality of these customers is terrific," said Chief Marketing Officer Mike Siefert. "There's a cost to bring to them in … We expect the payment for each of them to be $200, maybe less over time … but that's offset [by the quality of the customers]."

T-Mobile also announced that, in a matter of fiscal quarters, it has grown its Long Term Evolution (LTE) network from "literally zero to 209 million people covered in 273 cities," said Legere. It has also made progress in shifting customers from the MetroPCS network (the carriers completed their merger May 1) to the T-Mobile network.



 
 
 
 
 
 
 
 
 
 
 
 
 

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