T-Mobile Adds 1 Million-Plus Customers, Sold 5.6M Smartphones

By Michelle Maisto  |  Posted 2013-11-05

T-Mobile Adds 1 Million-Plus Customers, Sold 5.6M Smartphones

In a wireless market nearing saturation, new customers are key, and during the third quarter of 2013, T-Mobile added more than 1 million new customers—648,000 of who were postpaid phone additions.

It was its second consecutive quarter of adding more than 1 million customers.

"And we're talking about phone net adds, that's excluding tablets and other connected devices," T-Mobile CEO John Legere said during the carrier's Nov. 5 earnings call.

Legere called the quarter "outstanding" and said T-Mobile continues working "to change this stupid, arrogant industry."

The nation's fourth-largest carrier, behind Verizon Wireless, AT&T and Sprint, respectively, has branded itself the "un-carrier," and the tactic is working.

T-Mobile sold 5.6 million smartphones during the quarter, only 15 percent of which were iPhones. ("We could have done better had we had more supply during the launch," Legere said.)

The carrier also announced that more than 2.2 million customers had joined JUMP!, its $10-per-month upgrade plan, and it ended the quarter with 45 million customers.

Earnings were $1.34 billion, up 6.2 percent quarter-over-quarter, and revenues were up 8 percent quarter over quarter—due to the growth of its subscriber base, as well as the inclusion of the results of MetroPCS, the fifth-largest carrier that T-Mobile finished acquiring earlier this year—though the carrier posted a $36 million loss. Still, this was a world away from the nearly $8 billion loss it suffered a year ago, with no LTE network, no iPhones to sell, no un-carrier moves and a giant charge related to its merger with MetroPCS.

More than 1.5 million MetroPCS customers are now on the T-Mobile network. During the quarter, T-Mobile expanded MetroPCS into 15 new markets, and during the call officials said 15 additional markets—including Cincinnati, Dever and Portland—are going live Nov. 21.

Its LTE network, ahead of schedule, is now in 254 metro areas.

In October, T-Mobile also concluded its acquisition of 10MHz of Advanced Wireless Services (AWS) spectrum from U.S. Cellular for $308 million, which CTO Neville Ray called "fuel in the tank," though he added that T-Mobile plans to "push very hard" in 2014 for additional spectrum acquisitions.

Year of the Un-Carrier

T-Mobile has had a very busy year. In April it announced the first of its un-carrier moves–"Un-Carrier 1.0"—ditching two-year contracts and offering new Simple Choice plans. In July it introduced JUMP! (Un-Carrier 2.0), and in October (version 3.0) it announced unlimited data and texting for Simple Choice customers. Later in the month came the offer of 200MB of free data each month for tablet customers, encouraging the purchase of tablets with cellular connectivity.

"We think it's insane that most tablet owners don't sign up for high-speed wireless because they're afraid of data fees and overages," Legere said during the call.

T-Mobile Adds 1 Million-Plus Customers, Sold 5.6M Smartphones

With contracts, upgrades, high-speed data for tablets and international roaming woes solved, Legere put a spotlight on the next major "pain point" in need of addressing.

"I predict that family plans will quickly become a pain point," he said. "They were not created for the benefit of the family but as a way of [benefitting the carriers]."

Legere added that families are " fighting at the dinner table" over single buckets of limited, shared data, and that the "carriers that thrive on these family plans will have to do a massive massaging" of their current offers if they're going to keep their customers.

If they don't, they may risk losing more customers to Uncarrier 4.0, was the suggestion. Executives on the call shared that T-Mobile's "no apologies network position" means its 1 million-plus new customers came from "below and above."

CFO Braxton Carter clarified, "Mostly from AT&T and Sprint."

Sprint, which underwent a number of changes during its third quarter, sold 5 million smartphones during the quarter, lost 360,000 postpaid subscribers and had an operating loss of $398 million.

AT&T added nearly 1 million subscribers during its third quarter, though only 178,000 were postpaid smartphone customers. It lost 285,000 subscribers, who it described as mostly feature-phone users, and brought in $6.2 billion in profit on revenue of $32.2 billion.

Verizon posted income of $7.1 billion on revenue of $30.3 billion. Its wireless revenue was $20.4 billion, and it activated more than 7.6 million smartphones during the third quarter. During its earnings call, CFO Fran Shammo suggested that even the market leader wasn't impervious to being impacted by T-Mobile.

"I can't tell you we don't lose customers to our competitors," he said, adding that Verizon Wireless is seeing some "older 3G phone customers ... shift over to the lower-end pricing plans of competitors."

In the fourth quarter, said Shammo, Verizon plans to "get more competitive" about keeping them.

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