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T Mobile Posts Strong Q2 Earnings, Raises Subscriber Forecast

T-Mobile Posts Strong Q2 Earnings, Raises Subscriber Forecast

By Reuters | Updated: 31 July 2015 17:21 IST

T-Mobile US Inc on Thursday posted better-than-expected second-quarter profit and revenue and raised its 2015 subscriber forecast for the second time this year, boosting shares about 5 percent.

The No. 4 US wireless by revenue now expects to add 3.4 million to 3.9 million postpaid users, or customers who pay on a monthly basis based on usage, in 2015, up from 3.0 million to 3.5 million.

Quarterly revenue jumped 14 percent to $8.18 billion (roughly Rs. 52,360 crores) as aggressive promotions helped win customers in the second quarter. This beat analysts' estimate of $7.94 billion (roughly Rs. 50,824 crores).

Once faced with subscriber losses, the company has revamped pricing plans, eliminated service contracts and launched marketing campaigns to turn around its business and lure customers from bigger rivals Verizon Communications Incand AT&T Inc.

It posted net income of $361 million (roughly Rs. 2,310 crores), or 42 cents per share, surpassing analysts' forecast of 18 cents per share, according to Thomson Reuters I/B/E/S.

"T-Mobile has progressively addressed one after another the question marks around the sustainability of its growth," MoffettNathanson analyst Craig Moffett said in a note.

T-Mobile, which expects to report a profit in the third and fourth quarters, looks poised to pull ahead of Sprint Corp as the No. 3 US wireless provider based on subscriber numbers, Moffett said.

The company, which reported key user metrics earlier this month, added a net 2.1 million customers in the second quarter, up from 1.5 million a year earlier.

"We're several quarters in a row with more postpaid customers than a combination of AT&T, Verizon and Sprint's postpaid customer gains," Chief Operating Officer Mike Sievert said in an interview.

T-Mobile, which calls itself the "Un-carrier," said the rate at which users switch to other networks, also known as postpaid churn, fell to 1.3 percent from 1.5 percent a year earlier.

As the US wireless market becomes saturated, companies are looking for new revenue streams. Verizon is gearing up to launch a streaming video service for mobile devices and AT&T, which closed its $48.5 billion acquisition of DirecTV, is working on mobile video products.

About venturing into video, Sievert said the question is whether viewers want wireless providers to curate content for them.

"We're watching with interest what some of the others are doing," Sievert said. "If our customers want us in this game and if we can add value to it, better believe we'll be in it."

Shares rose $1.88 to $38.92 in late trading.

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