T-Mobile Profit Hits $101M for Q4 2014, Reversing $20M Loss in 2013

T-Mobile also brought in 4.05 million net add postpaid mobile customers for the full year of 2014, while cutting its mobile churn rate to 1.58 percent in 2014.

T-Mobile, earnings, revenue

T-Mobile US grew its fourth-quarter 2014 profit to $101 million, up from a $20 million loss in the same quarter one year ago, while increasing its Q4 revenue to $8.15 billion, up 19.4 percent from the same quarter in 2013.

The company also tallied 4.05 million net add postpaid mobile customers in 2014, giving it 25.8 million customers, which is up 18 percent from 21.8 million one year ago, according to its Feb. 19 earnings announcement.

Profit for the full year of 2014 came in at $247 million, up from $35 million in 2013, while full-year revenue came in at $29.56 billion, an increase of 21 percent from full-year 2013 revenue of $24.42 billion.

Diluted earnings per share for Q4 was 12 cents per share, compared with a 3 cent per share loss one year ago.

T-Mobile's branded postpaid mobile phone churn rate for Q4 was 1.73 percent, which was an increase from the 1.63 percent churn rate one year ago. For the full year, the company's churn rate was 1.58 percent, which was down from the 1.69 percent rate in 2013.

In the fourth quarter, T-Mobile said it sold 8 million smartphones, up from 6.2 million in the same quarter one year ago. For the full year of 2014, the company sold 28 million smartphones, up from 18.3 million in 2013.

"2014 was the best year of growth in company history," John Legere, the president and CEO of T-Mobile, said in a statement. "Our Un-carrier moves helped us blow away the competition. The best is yet to come as the future looks bright in 2015."

Eric Costa, a telecom analyst with Technology Business Research, told eWEEK in an emailed statement that while T-Mobile's recent customer and earnings accomplishments are notable, they won't be sustainable if the company doesn't invest in new growth segments.

"Despite current success in generating high subscriber and revenue growth, T-Mobile will face difficulty sustaining long-term revenue growth past 2015 due to the carrier's lack of investment outside of its core consumer mobility segment," wrote Costa. "The operator relies heavily on smartphone and tablet growth to drive growth in connections. T-Mobile's reliance on aggressive pricing tactics will further strain [average revenue per user] over the next year and phone subscriber growth will decelerate as the smartphone market continues to saturate. Tablets will become a more prominent source of subscriber growth over the next several years for T-Mobile; however, the devices carry a significantly lower ARPU than smartphones."

Several T-Mobile competitors, including AT&T and Verizon, "are currently better positioned to sustain long-term revenue due to their increased focus towards creating new revenue streams in segments including [Internet of things], video and enterprise services," wrote Costa. "T-Mobile lacks the broad portfolio that will drive long term revenue growth and therefore will continue to ride the short term smartphone wave through 2015 while it decides how to transition to more connected device segments."

To augment its wireless subscriber base, T-Mobile "will likely launch new connected device solutions in 2015, such as connected car offerings," wrote Costa. "The result will keep T-Mobile as one of the top operators in terms of postpaid subscriber net additions in 2015, though the metrics will be deceiving as ARPU will continue to deteriorate in the long term."

On the positive side, T-Mobile has had and "will continue to have success in the postpaid market with its Simple Choice plans, especially in retaining and adding positive postpaid phone additions," wrote Costa. "This bodes well for the operator in the short term as Verizon and AT&T are struggling to increase phone subscribers and are instead relying heavily on tablets for net additions."

In January 2015, T-Mobile unveiled new, cheaper prepaid mobile phone plans for customers who want service without paying extra for such features as free international texting and free music streaming. Starting at $40 per month, the new Simply Prepaid plans, with monthly 4G LTE data allotments of 1GB, 3GB or 5GB, give customers more choices for services that better fill their needs. All three Simply Prepaid plans offer unlimited data, talk and text. All data use beyond the monthly 4G LTE allotment is provided at lower 128K speeds under the plans. The new plans are priced at $40 per month for the 1GB accounts, $50 per month for 3GB accounts and $60 per month for 5GB accounts.

T-Mobile had an interesting year in 2014. In the third quarter of 2014, the company reported a loss of $94 million, due largely to its expenses in continuing to migrate its MetroPCS customers over to the T-Mobile network from older Code Division Multiple Access (CDMA) systems. About $97 million of the cost to shut down the old CDMA network was recognized in Q3. T-Mobile lost 12 cents a share for the quarter in connection with those costs, which was an increase from the 5-cents-per-share loss that was posted one year prior, according to a previous eWEEK report. About 87 percent of the total MetroPCS customer base was on the T-Mobile network at of the end of Q4, according to the company. In addition, about 73 percent of the MetroPCS spectrum had been integrated into the T-Mobile network by the end of 2014.