T-Mobile adds 2.5 million new customers in Q1 2014

T-Mobile adds 2.5 million new customers in Q1 2014

T-Mobile US has published its Q1 2014 report. The company has reported its best ever quarterly performance in branded postpard net customer additions. A total net of 2.4 million customers were added, including over 1.3 million branded postpaid net customers. This report marks the first quarter the carrier has had with more than 2 million net customers added to plans. It's a stark contrast to Sprint, which is still experiencing issues upgrading its network while maintaining its customer base.

The carrier has illustrated a considerable positive response to its 'un-carrier' marketing. T-Mobile has been on the aggressive for some time, attempting to eliminate consumer pain points and simply making everything easier to digest. The report notes how T-Mobile is absorbing market share from the competition, which would also roll into play with Sprint's continued downfall.

Of course, President and CEO of T-Mobile, John Legere wasn't shy in boasting about the figures and performance. "A year ago I promised that we would bring change to what I called this arrogant US wireless industry. We are delivering on that promise and our results reflect the growing customer revolution that we've ignited," said Legere. "We are now approaching 50 million customers, added 2.4 million net new customers in the first quarter alone, and posted our fourth quarter of consecutive service revenue growth, while once again adding more net new postpaid customers than the rest of the industry combined!"

While many question Legere's presentations, something at the carrier most be winning consumers over. Whether it's the new simple choice plans without annual contracts, device financing or the value plans, T-Mobile is finding itself in a stronger position in the highly competitive US market. Total revenues for Q1 2014 was up by 47 percent year-over-year, primarily due to the inclusion of MetroPCS results. Smartphone sales were also strong at a record 6.9 million units in the first quarter, further penetrating into its customer base.

As an outlook for 2014, T-Mobile expects to drive further momentum while continuing to invest in profitable growth. Branded postpaid net additions for 2014 are expected to be between 2.8 and 3.3 million. Be sure to check out the full press release and investor resource for more details.

Source: Thomson Reuters

T-Mobile US Reports First Quarter 2014 Results

First Quarter 2014 Highlights:

  • Total net additions of 2.4 million, marking the first quarter ever with more than 2 million net additions
  • Fourth consecutive quarter with over 1 million total net additions, now the fastest growing wireless company
  • Total branded net additions of 1.8 million including branded postpaid net additions of over 1.3 million
  • Total branded prepaid customer growth with 465,000 net additions
  • Record low branded postpaid churn of 1.5%, down 20 basis points sequentially and down 40 basis points YoY
  • Fourth consecutive quarter of pro forma sequential service revenue growth and a return to service revenue growth YoY on a pro forma combined basis
  • Adjusted EBITDA of $1.1 billion, down 12.2% sequentially due to the impact of significant acceleration in customer growth
  • Branded postpaid ARPU of $50.01, down 1.4% sequentially compared to a 2.9% decline in the prior quarter

BELLEVUE, Wash. – May 1, 2014 – T-Mobile US, Inc. (NYSE: TMUS) today reported first quarter 2014 results demonstrating continued strong momentum and record customer response to its Un-carrier moves. The Company has aggressively focused on eliminating consumer pain points and is delivering continued growth in its total and branded customer base through the successful execution of this strategy. In the first quarter, T-Mobile captured virtually all of the industry phone growth, while successfully taking market share from the competition.

T-Mobile reported 2.4 million total net customer additions with 1.8 million total branded net customer additions for the quarter, including branded postpaid net additions of 1.3 million and branded prepaid net additions of 465,000. T-Mobile was once again the fastest growing wireless company in America in the first quarter of 2014 with more than 1.2 million branded postpaid phone net additions, a result that dramatically outperformed the competition. The strong branded postpaid net addition performance resulted from continued momentum in gross additions, which were up 23% quarter-over-quarter and 136% year-over-year, and ongoing improvements in branded postpaid churn, which was 1.5% in the quarter, down 20 basis points quarter-over-quarter and down 40 basis points year-over-year.

"A year ago I promised that we would bring change to what I called this arrogant US wireless industry. We are delivering on that promise and our results reflect the growing customer revolution that we've ignited," said John Legere, President and CEO of T-Mobile. "We are now approaching 50 million customers, added 2.4 million net new customers in the first quarter alone, and posted our fourth quarter of consecutive service revenue growth, while once again adding more net new postpaid customers than the rest of the industry combined!"

Executing on the Un-Carrier strategy to drive results: T-Mobile's Un-carrier moves have ushered in a consumer revolution, giving consumers a stronger voice since the roll out began in March 2013. The Company's key Un-carrier initiatives were as follows:On March 26, 2013, the Company announced its radically simplified unlimited "Simple Choice" service plan with no annual service contract. Device financing with the Equipment Installment Plan (EIP) provides qualifying customers with low out-of-pocket costs on some of the most popular devices available in the US wireless industry. As of the end of the first quarter of 2014, 75% of T-Mobile's branded postpaid base was on Simple Choice/Value plans.

  • On July 10, 2013, the Company unveiled JUMP!™, a groundbreaking approach to more frequent phone upgrades. T-Mobile had more than 5.3 million customers enrolled in JUMP! at the end of the first quarter of 2014.
  • On October 9, 2013, the Company announced that it would make "the world your network – at no extra charge" - with unlimited data and texting worldwide in 100+ countries for Simple Choice customers. At the same time, T-Mobile announced that it had delivered nationwide 4G LTE in 233 metro areas covering 202 million people. Since then, Simple Choice with global data has expanded to 121 countries and destinations and 4G LTE coverage has increased to 284 metro areas covering more than 220 million people.
  • On October 23, 2013, the Company un-leashed tablets and revolutionized how customers buy and use tablets with free data for life. Customers can receive 200 MB of free data every month with any compatible tablet for as long as they own and use the registered device on T-Mobile's network. In the first quarter of 2014, T-Mobile had 67,000 mobile broadband branded postpaid net additions, principally composed of tablets, compared to 69,000 in the fourth quarter of 2013.
  • On January 8, 2014, the Company announced that it would reimburse Early Termination Fees (ETFs) for individuals and families who make the switch to T-Mobile and trade in an eligible device. The plan also offers a trade-in value for customers' phones. This program has seen unprecedented customer uptake with approximately 21% of branded postpaid gross adds taking the ETF offer in the first quarter of 2014.
  • In April 2014, the Company introduced 3 new programs - "Simple Starter," "Tablet Freedom," and "Overage Freedom" – that make our service plans and devices even more affordable, and we have eliminated all domestic overage charges for consumers, even those on legacy plans.

Operational and Financial Highlights for the First Quarter of 2014

T-Mobile ended the first quarter of 2014 with approximately 49.1 million customers, an increase of 2.4 million total customers from the end of the fourth quarter of 2013. T-Mobile significantly grew its total branded customer base, with 1.8 million net customer additions during the quarter. Branded postpaid net customer additions of 1.3 million, including more than 1.2 million phone net additions, continued the strong momentum seen in the previous three quarters, reflecting continued low branded postpaid churn and significantly higher gross additions. The Company's network modernization program and strong execution of its Un-carrier strategy contributed to a record low branded postpaid churn rate of approximately 1.5% for the first quarter of 2014, down 20 basis points versus the fourth quarter of 2013 and an improvement of 40 basis points compared to the first quarter of 2013. The branded prepaid business exhibited improved customer growth with 465,000 branded prepaid net customer additions in the first quarter of 2014, driven by the success of MetroPCS and growth in the 30 expansion markets launched in 2013.

During the first quarter of 2014, the quality of T-Mobile's customer base and receivables portfolio continued to improve as a result of the implementation of its Un-carrier strategy and the effect of credit tightening over the past two years. Service bad debt expense in the first quarter of 2014 was down 3% year-over-year and was down 13% quarter-over-quarter. 53% of EIP receivables were classified as Prime at the end of the first quarter of 2014, compared to 44% at the end of the first quarter of 2013 and 54% at the end of the fourth quarter of 2013. The slight sequential decline in EIP receivables classified as Prime was due to seasonal factors, most notably the tax season cash effect which drove a slight change in customer mix.

Total revenues for the first quarter of 2014 increased by 47.0% year-over-year, principally due to the inclusion of MetroPCS results in the first quarter of 2014. On a pro forma combined basis, total revenues for the first quarter of 2014 increased 15.3% year-over-year due to higher equipment sales and growth in service revenues. Total smartphone sales, including sales to branded postpaid and prepaid customers, were a record 6.9 million units in the first quarter of 2014, equivalent to 92% of total units sold, up from 91% in the fourth quarter of 2013. This represents a penetration of 81% of the total branded customer base at the end of the first quarter of 2014, up from 79% at the end of the fourth quarter of 2013. On a sequential basis, total revenues increased by 0.7% primarily due to growth in service revenues. The portion of branded postpaid customers on Value or Simple Choice plans was 75% at the end of the first quarter of 2014, up from 69% at the end of the fourth quarter of 2013.

Service revenues for the first quarter of 2014 grew by 33.3% year-over-year primarily due to the inclusion of MetroPCS results for the full quarter. Service revenues increased by 3.3% quarter-over-quarter primarily due to growth of the Company's customer base, offset in part by increased adoption of Value and Simple Choice plans, which have lower monthly service charges than traditional bundled plans. T-Mobile's service revenues have grown in each of the last four quarters on a sequential basis. On a pro forma combined basis, service revenues for the first quarter of 2014 increased 4.5% year-over-year. This represents a significant improvement over the fourth quarter of 2013, when service revenues declined by 1.1% year-over-year on a pro forma combined basis, and marks a return to year-over-year service revenue growth.

Branded postpaid average revenue per user (ARPU) decreased quarter-over-quarter by $0.69 or 1.4% to $50.01, an improvement compared to the quarter-over-quarter decline of 2.9% in the fourth quarter of 2013. Branded postpaid ARPU again declined on a year-over-year basis due to the increased adoption of Value and Simple Choice plans. However, the year-over-year decline in branded postpaid ARPU of 7.5% did show an improvement compared to the year-over-year decline of 8.6% in the fourth quarter of 2013. Branded postpaid Average Billings per User (ABPU), which consists of branded postpaid service revenues plus EIP billings divided by the average branded postpaid customers in the period, was $59.54 in the first quarter of 2014, up 3.9% compared to the first quarter of 2013 and up 1.3% compared to the fourth quarter of 2013. Branded prepaid ARPU for the first quarter of 2014 increased by $0.25 or 0.7% to $36.09 compared to the fourth quarter of 2013.

Adjusted EBITDA for the first quarter of 2014 was $1.1 billion, a 12.2% decline from the fourth quarter of 2013, reflecting increased equipment sales due to the significant acceleration in customer growth and the success of the Un-carrier 4.0 – Contract Freedom offer. Adjusted EBITDA margin was 20% compared to 24% in the fourth quarter of 2013.

Cash capital expenditures for the first quarter of 2014 were $947 million, up from $882 million in the fourth quarter of 2013 but down from $1.2 billion on a pro forma combined basis in the first quarter of 2013. Cash capital expenditures reflect T-Mobile's continued investment in network modernization and 4G LTE deployment.

MetroPCS Combination

T-Mobile has continued to make rapid progress on the expansion and integration of MetroPCS. On July 25, 2013, the Company announced the strategic expansion of the MetroPCS brand with the planned launch of 15 new geographic markets. On November 21, 2013 the Company launched the MetroPCS brand in 15 further markets, bringing the total of expansion markets to 30. As of March 31, 2014, the Company has opened nearly 2,200 distribution points in these new markets.

The Company began selling T-Mobile-compatible devices to MetroPCS customers in the second quarter of 2013 through MetroPCS branded distribution points and has already transitioned approximately 53% of MetroPCS customers to the T-Mobile network. More than 50% of the MetroPCS spectrum has been re-farmed and integrated into the T-Mobile network at the end of the first quarter of 2014.

2014 Outlook Guidance

T-Mobile expects to drive further momentum while continuing to invest in profitable growth. With the success of our Simple Choice plan and the continued evolution of the Un-carrier strategy, branded postpaid net additions for 2014 are now expected to be between 2.8 and 3.3 million.

For the full year of 2014, T-Mobile now expects Adjusted EBITDA to be in the range of $5.6 to $5.8 billion.

Cash capital expenditures are expected to be in the range of $4.3 to $4.6 billion.

With this growth and rate plan migrations, the penetration of Value/Simple Choice plans in the branded postpaid base is projected to be between 85% and 90% by the end of 2014.

Quarterly Financial Results For more details on T-Mobile's first quarter 2014 financial results, including its "Investor Quarterly" with detailed financial tables and the required non-GAAP reconciliations, please visit T-Mobile US, Inc.'s Investor Relations website at http://investor.T-Mobile.com.

For comparison purposes, pro forma combined measures presented in this release include the combined results of T-Mobile USA and MetroPCS to reflect the business combination for the relevant periods. See Investor Quarterly for further details.

Rich Edmonds

Rich is UK Editor for Windows Phone Central but you'll see him on iMore and everywhere else on Mobile Nations as part of the Newsroom team!

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T-Mobile adds 2.5 million new customers in Q1 2014

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Looking good.. now if they can just avoid being bought by Sprint.. I still believe that would be a massive weight and even combined.. not something that would necessarily save Sprint.. Add to the fact that T-mobile is doing fine.. Why would DoJ or FCC feel the need to risk T-mobiles position by combining them with Sprint? They were right the first time with ATT.. I think they should stick to their guns..

If theirs to be only 3 in the market.. better to have 3 strong ones (T-mobile/ATT/Verizon) than a tipsy Tsprint in the mix.. Sometimes you just need to back off and let it succeed or fail based on it's own merits.. no need to let the drowning Sprint to drag down T-mobile with a crap load of debt.. T-Mobile is finically well off.. :/

At the end of the day, tmobile cannot compete in its current state with ATT or verizon. They just don't have the coverage of the larger carriers. They will always be relegated to second tier status if this doesn't change. A merger with sprint, one that kept tmobile as the face of the company would make tmobile a real competitor. I'm not sure tmobile could survivor in the long run as second tier carrier. Maybe it could, but I wouldn't bet on it.

Not sure where you get that.. first.. like me, many are with T-Mobile for the value proposition.. I have NO coverage issues.. Unless I move to an area T-mobile isn't.. I'm staying. .just like millions of other T-Mobile customers..

You make it sound like if they don't instantly cover everything they will loose a ton of customers.. not the case.. Those who move over do so for the value proposition they offer. They already likely have coverage in the area if they are looking.

Second.. T-mobile is already working on the national coverage issues and has made strong headway into that with the new 700Mhz they just finalized and will start deploying by end of year.. Add to that the other spectrum auctions coming up.. I've no doubts of their expansion...

They have no NEED to instantly expand .. Thats a Wall Street view, a narrow one at that. As long as they are patient and stay the course they will be just fine long term; continually sapping customers from Verizon/ATT/Sprint as they steadily expand..

They've a plan.. and it's a good one..

Basic math. For $70 I get what the other carriers charge $100 to $120.

The only bright rumor I have heard for a possible Sprint buyout is that it might be more of a merger with John Legere in charge of the final result. I suppose that would work out.

This article fails to mention how the company is hemorrhaging money as a result of their subscriber gains and aggressive pricing.

Gotta pay to play. I'm sure once the growth stabilizes and EIP debt is paid down, the numbers will get better.

T-Mobile doesn't need Sprint. T-Mobile is a GSM Network , Sprint is a CDMA Network, they do not gel and would be nothing but one large headache. T-Mobile has added more new post-paid customers than all others combined. Anyone who says they can't compete with the two so called giants must be a customer of theirs. My data speeds are twice as fast as any Carrier in my area, never drop calls, real unlimited data without throttling and throw in 3gb of free tethering. I call this the best Carrier in the US. Thank You T-Mobile.

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The key part of your opinion of T mobile is I'm your area. When it comes down to it mobile providers need to provide fast data speeds over as large of an area as possible to draw more subscribers. It will be hard to merge a GSM and a CDMA network, but it can be done. If John Legere is the head of the merged company I would bet it would work. If for no other reason than he has been able make such a big change in tmoblie's reputation in such a small time frame. If a merger does get approved I cannot see the sprint leadership being put in charge because they just do not seem able to shake Sprint's rep as a screw up.

I have to wonder if the reason Masayoshi Son, the owner of Soft Bank, is interested in T mobile because of the spectrum, subscribers and most importantly John Legere. I have been with sprint for a very long time, but if I am being honest Sprint has spent most of that time responding to what Verizon and AT&T are doing. Legere has only been at Tmobile for about 2 years, but he has managed to make the 2 largest providers respond to his company, which is not even close to Verizon and AT&T in terms of coverage or subscribers. If you read about Son and Legere then you start to see that they both have a talent for taking on larger companies and winning despite clearly being the underdog. I do not think that Tmobile or Sprint will be able to take in the big two providers in any meaningful way anytime soon unless they combine resources. They are too far behind in terms of coverage and number of subscribers. I like having more competition in markets, but it has to be meaningful competition. I am curious to see what Legere can do that after merging Sprint and Tmobile with all of that spectrum and Softbanks's backing.