T-Mobile subscribers up for 2nd straight quarter

Nov 05, 2013, 11:22 AM EST
T-Mobile Begins Offering Apple's iPhone
Getty/ Spencer Platt

BELLEVUE, Wash. (AP) — T-Mobile's initiatives to break wireless industry conventions seem to be working.

The No. 4 wireless company said Tuesday that it added 643,000 long-term, good-credit phone customers in the latest quarter. It's the second straight quarter of increase after years of losses.

The growth comes as T-Mobile introduced new pricing plans, the ability to upgrade phones more frequently and free data and texting services in more than 100 countries.

T-Mobile is also boosting its subscriber growth prediction for the full year. T-Mobile says it now expects to add a net 1.6 million to 1.8 million of the good-credit customers this year, up from its previous prediction of 1 million to 1.2 million.

Shares of T-Mobile, which is under the control of Germany's Deutsche Telekom AG, initially rose as much as 4 percent after the results came out, but it fell 2 percent to $27.79 by late morning.

One concern: Much of the gains came from new plans with lower service fees. For the core plans, average revenue per subscriber was $52.20, down from $56.59 a year ago. T-Mobile expects that to stabilize, but not until late next year.

In the quarter, T-Mobile lost $36 million, down from a loss of $7.7 billion a year earlier. Last year's quarter included accounting charges reflecting the declining value of assets. The assessment had been made in preparation for the merger with MetroPCS this year.

Third-quarter revenue grew 37 percent to $6.7 billion, largely because of the inclusion of MetroPCS. T-Mobile also benefited from higher smartphone sales.

Overall, T-Mobile added 1 million customers in the third quarter to end with 45 million. Besides the 643,000 good-credit phone customers, T-Mobile added 5,000 of such customers for non-phone devices, namely tablets.

That left it with 21.4 million of such customers. These so-called post-paid customers are more lucrative and stable for wireless carriers. Elsewhere, these are known as contract customers, but T-Mobile ended traditional two-year contract requirements when it introduced new pricing plans in March.

T-Mobile also added 24,000 so-called prepaid customers — those who are on limited-use plans or who pay for monthly service in advance. It's less than 365,000 increase a year earlier, a figure that excludes MetroPCS customers, who didn't join T-Mobile until the two companies merged this year. T-Mobile says many of those pre-paid customers simply moved to the core plans.

The remaining gains came from wholesale customers, which include services for machines talking to machines.

Craig Moffett, a telecom analyst with MoffettNathanson, reiterated that the latest report underscored the need to take T-Mobile seriously. Before coming out with various plans to break industry practices, T-Mobile was largely regarded as an afterthought.