CORRECTED-UPDATE 2-T-Mobile US Q3 subscriber growth tops Street; shares rise

Tue Nov 5, 2013 10:10am EST

(Corrects year-ago GAAP revenue to $4.89 billion, not $4.26 bln; error also occurred in update 1)

By Sinead Carew

Nov 5 (Reuters) - T-Mobile US Inc, the No. 4 U.S. mobile provider, reported third-quarter subscriber growth well ahead of expectations on Tuesday, and showed it was putting pressure on market leaders Verizon Wireless and AT&T Inc.

T-Mobile shares rose 3.6 percent in premarket trade after it reported its second straight quarter of growth after four years of customer losses.

T-Mobile US, 74 percent owned by Deutsche Telekom AG , has been fighting aggressively to return to growth by sharply criticizing its bigger rivals in its marketing and selling itself as more consumer-friendly.

It added 648,000 net subscribers in the quarter, compared with the average expectation for 444,000 subscribers, according to seven analysts contacted by Reuters.

While its biggest rival, Verizon Wireless, reported much faster overall subscriber growth of 927,000, T-Mobile blew past customer additions at No. 2 U.S. mobile provider AT&T, which added 363,000, and Sprint Corp, which lost 360,000 in the quarter.

Excluding connections to devices such as tablet computers, T-Mobile reported phone subscribers of 643,000 that beat Verizon Wireless's growth of 481,000. Without tablets, AT&T would have reported subscriber losses in the quarter, according to analysts.

"It's overall a good quarter," said Hudson Square analyst Todd Rethemeier. "Customer growth was much better than expected, which usually results in lower profitability but in this case they made up for it elsewhere and total profitability was roughly in line with my estimate."

Rethemeier said T-Mobile's adjusted earnings before interest, taxes, depreciation and amortization of $1.34 billion was not far behind his estimate of $1.36 billion, likely because of savings from its merger with MetroPCS.

After two quarters of beating expectations, T-Mobile was also able to increase its customer growth target for 2013 to a range of 1.6 million to 1.8 million from its previous target range of 1 million to 1.2 million.

Its net loss narrowed to $36 million in the third quarter from $7.74 billion in the year-ago period, when it incurred a massive goodwill impairment charge of $8.1 billion.

Total revenue jumped to $6.69 billion from $4.89 billion, primarily due to the MetroPCS merger earlier this year.

Verizon Wireless is owned by Verizon Communications Inc and Vodafone Group Plc.

T-Mobile shares rose to $29.35 from a Monday close at $28.34 on the New York Stock Exchange. (Reporting by Sinead Carew; Additional reporting by Chuck Mikolajczak; Editing by Gerald E. McCormick and Jeffrey Benkoe)

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