(Reuters) - T-Mobile US Inc, the No.3 U.S. wireless carrier, reported quarterly profit and revenue above estimates as promotional offers helped add more subscribers.
The company has been gaining market share from rivals Verizon Communications Inc, AT&T Inc and Sprint Corp, in an oversaturated U.S. wireless market. T-Mobile had a number of promotional offers in the fourth quarter, including a free iPhone 7 offer with eligible trade-in around Black Friday.
But T-Mobile could face more competition following Verizon’s announcement this week that it would reintroduce an unlimited data plan as well as from a new promotion launched earlier by Sprint.
On a conference call with analysts and investors, Chief Executive Officer John Legere dismissed such concerns.
“The competitive environment so far is based upon moves that others are making out of desperation,” he said.
Net income rose to $390 million, or 45 cents per share, for the quarter from $297 million, or 34 cents per share, a year earlier. Total revenue rose 23.4 percent to $10.18 billion.
Analysts, on average, were expecting a profit of 30 cents per share and revenue of $9.84 billion, according to Thomson Reuters I/B/E/S.
For 2017, T-Mobile expects branded postpaid net additions of 2.4 million to 3.4 million.
Analysts said the numbers may be viewed as disappointing but noted that T-Mobile tends to give conservative forecasts at the beginning of the year.
The company also expects free cash flow to grow between 45 percent to 48 percent annually for the next three years, in line with analyst estimates.
Shares were roughly flat in Tuesday trading on the Nasdaq.
Industry watchers have long speculated that T-Mobile and Sprint, the No. 3 and No. 4 biggest players in U.S. wireless, will combine. Asked last week about renewed merger talks with T-Mobile, Masayoshi Son, whose SoftBank Group Corp is a majority shareholder in Sprint, said he was keeping his options open.
Legere said on the call in response to a question on Sprint that T-Mobile was “a very healthy growing franchise, and if we choose to, we can continue to drive tremendous shareholder value on our own or participate in various forms ... of consolidation.”
T-Mobile, which had released its subscriber numbers for the quarter in January, added 933,000 postpaid phone subscribers, or those who pay monthly bills, on a net basis, in the three months ended Dec. 31. Churn, or customer defections, declined to 1.28 percent, from 1.46 percent a year ago.
Reporting by Anjali Athavaley in New York; Editing by Nick Zieminski and Phil Berlowitz