(Adds comments from CFO On customers, CMO on industry
consolidation, updates share prices)
By Marina Lopes
April 30 T-Mobile US Inc said it added
a record number of customers in the first quarter, blowing past
its competitors as the company's aggressive discounts lured in
T-Mobile shares jumped 7.3 percent as the company that has
billed itself as the "uncarrier" signed up 2.4 million new
customers in the first quarter, topping estimates of 932,000.
That was more than its top three rivals combined, a first for
the No. 4 mobile carrier in the United States based on total
No. 3 carrier Sprint Corp is currently meeting with
banks to work out funding for a bid for T-Mobile, a source
familiar with the situation said, as the mobile carrier works to
ease regulatory concerns that the deal would hurt competition.
U.S. authorities rejected a 2011 merger between AT&T and
T-Mobile on grounds that the market needs at least four major
players to be competitive
"Certainly it is turning out that the fact that the FCC had
the foresight to enable us to continue to compete and not
combine with other duopolists has been a good thing," said Mike
Sievert, chief marketing officer at T-Mobile.
"Consolidation if done right and if it allows T-Mobile a
super charged ability to be a disruptive competitor, improving
the wireless industry for consumers, we would be interested," he
The company will rely on free cash flow and debt to finance
the upcoming spectrum auctions and does not plan on diluting
shares, he said.
T-Mobile, two-thirds owned by Deutsche Telekom AG
, started to turn the corner last year after losing
customers for four years, through aggressive marketing and heavy
advertising for its wireless plans that have enabled it to grab
The company launched a series of promotions this year,
including eliminating contracts and introducing a billing plan
for equipment that allows customers to pay for devices in
installments. Analysts said the installment plans could pose a
liability for the company if the economy turns sour as some
customers may not be able to complete payments.
"The 'uncarrier' strategy is working from a subscriber
perspective and the market is responding to that," said Michael
McCormack, an analyst at Jefferies.
Still, the mobile service provider lost $151 million, or 19
cents per share, in the quarter, compared with a profit of $107
million, or 20 cents per share, a year earlier.
Revenue rose 47 percent to $6.88 billion, compared with
$4.68 billion in the year-ago quarter.
Analysts, on average, expected a loss of 19 cents per share
on revenue of $6.92 billion, according to Thomson Reuters
It said earnings before interest, taxes, depreciation and
amortization, or cash flow, fell 12.2 percent from the previous
quarter to $1.1 billion due to additional costs from the sudden
rise in subscribers.
But the company's chief financial officer said T-Mobile is
attracting higher quality customers that are migrating from
other carriers and have a better credit profile.
"The significant improvement towards prime customers helps
inoculate us for any downturns that could happen in the future,"
Chief Financial Officer Braxton Carter said.
In the quarter T-Mobile added 1.3 million postpaid customers
- those who pay monthly bills - and 465,000 prepaid customers,
who pay for calls in advance.
Churn for postpaid service was 1.5 percent, down 20 basis
points from the fourth quarter and off 40 basis points from a
T-Mobile stock rose $2.14 to $31.43.
(Additional reporting by Supantha Mukherjee and Soham
Chatterjee; Editing by Joyjeet Das, Jeffrey Benkoe and Andrew