(Adds analyst quote, updates share price)
By Marina Lopes
July 31 T-Mobile US Inc on Thursday
posted its first net profit in a year, raised its forecasts for
subscriber growth and reported the most postpaid phone
subscriber additions in the industry.
The second-quarter results, which showed slower decreases in
average revenue per user, eased investor's fears that the No. 4
U.S. mobile operator's success in luring subscribers from
competitors was not sustainable.
"What matters most for T-Mobile and Sprint is subscriber
growth, said Cowen Group analyst Colby Synesael.
The future of wireless growth will come from charging
customers for multiple devices on the same plan, Synesael said.
"Three to five years from now, your revenue growth will be
largely capped by how big that base is."
Last year T-Mobile turned around years of subscriber losses
through campaigns that have eliminated contracts, restructured
pricing plans and sparked price slashing across the industry.
"These are not huge discount programs," said Chief Executive
Officer John Legere. "They are profitable moves that we can
sustain very strongly."
The company reported net income of $391 million, or 49 cents
per share, compared with a year-earlier loss of $16 million, or
2 cents per share.
T-Mobile added 1.5 million net customers in the second
quarter and 102,000 net prepaid subscribers, compared with
prepaid subscriber losses for the top four wireless carriers.
Shares of T-Mobile were up 1.2 percent at $31.30 in morning
Quarterly revenue rose 15.4 percent to $7.2 billion, beating
estimates of $7 billion. The company benefited from higher
equipment sales and the popularity of a series of promotions
aimed at luring subscribers away from its biggest rivals,
Verizon Communications Inc and AT&T Inc.
In June, T-Mobile began offering customers a free one-week
trial of its service and announced that streaming from the top
eight major music providers would not count against customers'
The company said 80 percent of its postpaid customers were
now on its Simple Choice plan, which unbundles equipment costs
from service charges.
The company stuck to its 2014 forecast for earnings before
interest, taxes, depreciation, and amortization even though it
raised its outlook for postpaid customer adds to between 3
million and 3.5 million from a prior range of 2.8 million to 3.3
T-Mobile, which is 67 percent owned by Deutsche Telekom
, said it had earned $391 million, or 48 cents per
share, in the second quarter, compared with a year-earlier loss
of $16 million, or 2 cents per share.
Postpaid average revenue per user decreased by 2.2 percent
to $49.32 as more customers opted for lower-priced plans.
(Reporting by Supantha Mukherjee in Bangalore and Marina Lopes
in New York; Editing by Savio D'Souza and Lisa Von Ahn)