T-Mobile Has Strong Q2 With Increases in Revenue and Customers

The carrier continues to make positive strides, several analysts told eWEEK, as it continues to grow its customer base and earnings figures.  

T-Mobile, mobile carriers, wireless carriers, earnings, customer net adds, AT&T, Verizon, Sprint, smartphones, tablets

T-Mobile just logged a solid second quarter, with $361 million in net profit on $8.2 billion in revenue and higher than expected diluted earnings of 42 cents per share.

In a conference call with analysts on July 30, the mobile carrier also announced that it gained 2.1 million net customers in the quarter ended June 30, bringing its latest customer tally to 58.9 million. That marks T-Mobile's ninth consecutive quarter in which it has added more than 1 million customers, according to the company.

T-Mobile's Q2 net profit was down 7.7 percent from the profit it posted in the same quarter one year ago, but it was 350 percent higher than the $63 million loss it posted in the previous quarter. The company's revenue of $8.2 billion was up 13.8 percent from the same period one year ago and up 5.2 percent from the $7.8 billion posted in the previous quarter.

The per (diluted) share earnings of 42 cents were three times higher than the 14 cent per share expectations of a group of analysts who were surveyed by Bloomberg, according to a July 30 Bloomberg report. The earnings per share were up from 9 cents per share in the previous quarter.

"While the [other] carriers continue to use gimmicks to confuse consumers, T-Mobile continues to listen to customers and respond with moves that blow them away," John Legere, president and CEO of T-Mobile, said in a statement. "On top of adding 2.1 million new customers in the second quarter, we delivered 14 percent year-over-year revenue growth and 25 percent year-over-year Adjusted EBITDA growth. Overall, I think our results speak for themselves."

T-Mobile reduced its customer churn in Q2 to 1.32 percent, down from 1.48 percent in the same quarter one year ago, while it sold 8.3 million more mobile devices in the quarter, including some 7.4 million smartphones.

Several analysts contact by eWEEK said that T-Mobile's Q2 earnings are clear indicators that the company is continuing to be successful in attracting customers with its messages of simpler and more straight-forward calling plans and device pricing.

Bill Menezes, a mobile carrier analyst with Gartner, told eWEEK that the 1 million postpaid customer additions posted by T-Mobile in Q2 are "impressive" and "Verizon-type numbers."

The company's profitable growth, with 25 percent year-over-year growth in EBITDA, is big because "it implies the company will continue to be able to finance the rapid buildout of its network and the purchase of even more spectrum to ensure it has enough coverage and capacity to compete with AT&T and Verizon," said Menezes. "They're selling more phones and everything is moving in the direction that it should be moving for a company that is on a growth path."

Charles King, principal analyst for Pund-IT, said he's been hearing rumors that T-Mobile is "actually going to bump back into the No. 3 spot in the U.S. mobile carrier rankings when the next numbers come out." If that happens, the company will replace competitor Sprint in the rankings, bumping that company to No. 4.

"What I appreciate about the company is its willingness to shake up the status quo" with the introduction of no-contract offerings and other so-called "Un-carrier" promotions and service upgrades for customers, said King. "They were responsible for taking apart the two-year contract culture that dominated smartphones and probably would still be dominating the smartphone market if T-Mobile hadn't spoken up. The fact that they're willing to stop and think differently and act differently is responsible for a large degree of the growth that they've been seeing."

Richard Guppy, an analyst with Strategy Analytics, said the latest T-Mobile earnings figures are impressive and are the result of the company providing real customer value in the industry.

T-Mobile is looking at what customers are demanding and is working to provide those wants, including simplicity, value and good service, said Guppy. "T-Mobile happens to be at the right place with the right management team at the right time and is executing very strongly. AT&T and Verizon have been following … with a great variety of price plans that have premium prices for premium services. That's fine—until a competitor has a better deal."

Maribel Lopez, principal analyst at Lopez Research, agrees. "It looks like they had a winning quarter and that the Un-carrier pricing and simplicity is resonating with the market."