May 1 - T-Mobile USA gained a record number of customers but lost money. Sources say Sprint is talking to banks to raise money to bid for T-Mobile. Fred Katayama reports.
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The swashbuckling carrier, T-Mobile US, added more customers than ever, but it swung to a loss in the latest quarter. That's because it lavished huge discounts and promotions like its offer to pay early termination fees for customers who switch from rival carriers. So while its revenue jumped 47 percent, its operating expenses leapt by even more.
Led by its brash CEO John Legere, T-Mobile says it added more contract wireless subscribers than the industry combined. And it cut the rate of customer defections. That's a sharp turnaround after four years of bleeding customers.
Nomura analyst Adam Ilkowitz said, "We think this is a strong set of results, though see the stock continuing to be driven by M&A expectations more than fundamentals near term."
Sources say Sprint is meeting with several banks to raise money to bid for T-Mobile US. But Sprint may have to shed some spectrum to gain the blessing of regulators. Authorities rejected a merger between AT&T and T-Mobile three years ago on the grounds that it would be anti-competitive in an industry dominated by a few big players.
Stocks of both Sprint and T-Mobile US shot sharply higher at the start of trade.
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