T-Mobile Posts $479M Profit in Q1, Reversing $63M Year-Ago Loss

Revenue was up for T-Mobile in the first quarter of 2016 to $8.6 billion from $7.8 billion one year ago, while the company also added 877,000 branded postpaid phone customers.

T-Mobile, revenue, Q1 2016 revenue, profit, smartphones, postpaid additions, prepaid additions, John Legere

T-Mobile's first quarter of 2016 was a good one, with a $479 million net income that contrasts with a $63 million loss one year ago, and revenue that rose to $8.6 billion from $7.8 billion for the same quarter in 2015.

Adding to the company's healthy profit and revenue news are diluted earnings per share of 56 cents, which vastly exceeded the 10 cents per share that was expected by a survey of 21 financial analysts reported by Thomson, and another 877,000 branded postpaid phone net customer additions for the quarter. The figures were reported by T-Mobile in an announcement and conference call with analysts on April 26.

Overall, T-Mobile saw net customer adds of 2.2 million for the quarter, which was made up of new retail postpaid and prepaid phone customers, new wholesale users and new mobile broadband users combined, according to the company. The figures mark the 12th consecutive quarter with more than 1 million net additions, as well as the sixth time in the last seven quarters that more than 2 million customers have been added in a quarter, said T-Mobile.

The new customers give T-Mobile 65.5 million customers at the end of Q1, compared with 56.8 million one year ago.

The company also reported service revenue of $6.6 billion, which is up by 13 percent over the $5.8 billion that was brought in the same quarter one year ago.

"I can't think of a better way to start off 2016 than by capturing all of the industry's postpaid phone growth—again," John Legere (pictured), the president and CEO of T-Mobile, said in a statement. "Our model is working and the business momentum is accelerating across the board. Customers are joining the Un-carrier revolution and that is producing incredible financial results. A winning formula for customers and TMUS shareholders."

T-Mobile had a branded postpaid phone churn rate of 1.33 percent for the first quarter of 2016, which is a slight increase from the 1.30 percent rate one year ago. Branded prepaid churn was 3.84 percent in the first quarter, compared with 4.20 percent one year ago.

The company also reported sales or leases for 9.4 million devices in the first quarter of 2016, including 8.8 million smartphones.

Based on the customer additions reported for Q1, the company has now raised its guidance for full-year branded postpaid net customer additions to between 3.2 million and 3.6 million, an increase from the previous guidance range of 2.4 million to 3.4 million.

Over the last several years, T-Mobile has unveiled a series of what it calls "Un-carrier" events that have ended mobile contracts for consumers, removed overage charges, created rollover data capabilities, added Binge-on video and Music Freedom streaming without using a customer's data plan buckets, and more.

Several IT analysts who spoke with eWEEK said those services are apparently helping the company and contributing to its Q1 successes.

"Overall, the company seems to be firing on all cylinders," wrote Charles King, principal analyst with Pund-IT, in an email reply to an inquiry. "But at the same time, its 'Un-carrier' strategy and offerings like Binge-On video are forcing other service providers to follow its lead."

Led by Legere, its "unconventional" CEO and leader, "T-Mobile has become a company customers love and competitors fear," wrote King. "That may be an ultimate goal for any business but it's particularly impressive in the cutthroat mobile service provider market."

Jeff Kagan, an independent telecom analyst, said that T-Mobile's latest quarterly results show that while the company was "stalled for years … they have restarted their growth engines and it is good to see them winning business."

At the same time, though "they will follow AT&T and Verizon at some point and their [customer] acquisition wave will slow," he added.

Another analyst, Rob Enderle, principal of Enderle Group, told eWEEK that it's "kind of amazing how T-Mobile has apparently gone, much like Apple initially did, from the firm that couldn't execute to the firm that can't be beat. This serves as a warning to all aging firms which often lose track of their users as they focus more and more on quarterly results and creative ways to mine users for cash."

T-Mobile's approach is proof that focusing on the needs of customers is a good business plan, he wrote. "T-Mobile's financials now serve as another example, much like Apple did under [Steve] Jobs, that the skill for talking to users' needs is invaluable in a CEO and Legere is effectively replacing Jobs as this decades' example of how to be a superstar CEO."