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T-Mobile’s “Un-carrier” strategy and the addition of the Apple iPhone 5 to its smartphone portfolio are indeed helping to turn around the scrappy-but-struggling No. 4 carrier. Though not without some hiccups.
T-Mobile added 579,000 net new customers during the first quarter and sold approximately 500,000 iPhones (it doesn’t share what percentage went to new customers, leaving that to a reader’s imagination).
It lost 199,000 branded postpaid customers—a 61 percent improvement over the same quarter a year ago—gained 202,000 prepaid customers and added 3,000 branded customers, making for its “first branded customer growth since first quarter 2009,” T-Mobile said in a May 8 statement.
It also continued to have success with its Value and Simple Choice plans, which 36 percent of its customers are now on, up from 30 percent during the fourth quarter of 2012. But the adoption of its low-cost plans pushed down service revenues by 7.1 percent year over year.
Quarter to quarter, T-Mobile’s EBITDA—earnings before interest, taxes, depreciation and amortization—increased by 12.4 percent, but year over year it fell by 7.5 percent.
“Our first quarter operating metrics and financial results are showing positive impact from the changes we began making in the fourth quarter,” CEO John Legere said in a statement.
Indeed, it was a busy first quarter for T-Mobile.
On March 26, it launched its contract-free Simple Choice service plans, offering a unique proposition in an industry rather set on a business model based on two-year contracts and device subsidies.
On April 12, T-Mobile became the last tier 1 carrier to sell the iPhone—a device it needed, Legere has said, to get customers in the door.
Finally, on April 30 it completed its merger with MetroPCS. The combined new company represents approximately 43 million subscribers, has 70,000 customer touch points and has a network covering 301 million people. While 228 million currently have 4G coverage, by year’s end it expects to cover 200 million with Long Term Evolution (LTE) 4G. Trailing well behind its competitors’ efforts, T-Mobile currently offers LTE in only seven markets.
“The combination of T-Mobile and MetroPCS creates an even stronger disruptive force in the U.S. wireless market,” Legere said in a statement announcing the completion of the merger. “Together, as America’s Un-carrier, we’ll continue our legacy of marketplace innovation by tearing up the old playbook and rewriting the rules of wireless to benefit consumers.”
Moving forward, T-Mobile said it is also looking for ways to reduce overhead and operational costs and continues to re-evaluate its cost structure and eliminate initiatives that don’t fit its Un-carrier model. It’s currently implementing changes, it said, targeted to deliver more than $1 billion in gross cost savings.
Some of these changes include a slimming down of its staff. The Seattle Times has reported that T-Mobile cut more than 4,200 jobs in 2012 and in March began a series of layoffs said to affect at lest 100 people in marketing and other groups.
“Things only get more exciting from here,” Legere said in today’s statement, “having brought T-Mobile USA and MetroPCS together to create the wireless industry’s value leader and premier challenger.”