Subscriber additions drive T-Mobile's profit beat, forecast

Reuters News
|
Posted: Jul 27, 2016 7:40 AM

By Aishwarya Venugopal

(Reuters) - T-Mobile US Inc's quarterly revenue and profit beat analysts' estimates as heavy promotions helped the No.3 U.S. wireless carrier attract customers and allowed it to raise its full-year forecast for postpaid subscriber additions.

Shares of the company, in which Deutsche Telekom holds a majority stake, rose as much as 2 percent to a nine-year high of $45.87 in morning trading on Wednesday.

Under Chief Executive John Legere, T-Mobile has rolled out offers including rollover plans and free video and perks such as free food, Wi-Fi, movie tickets and ride shares.

Last month, T-Mobile started offering monthly subscribers a chance to get up to 100 of its shares a year by signing up for its plans and recommending them to friends.

Such promotions helped T-Mobile add 1.88 million customers in the second quarter, higher than the 1.77 million analysts had expected, according to research firm FactSet StreetAccount.

The company added 890,000 postpaid customers, or those who pay monthly bills, topping the estimate of 838,000.

"We expect subscriber momentum to remain strong," J.P. Morgan analyst Philip Cusick wrote in a note.

T-Mobile raised its full-year forecast for net postpaid subscriber additions to 3.4 million-3.8 million from 3.2 million-3.6 million.

Cusick said he expected more "upside" through the year, given that T-Mobile was usually conservative with its guidance.

T-Mobile's postpaid phone churn rate - the rate at which users switch to other networks - declined to an all-time low of 1.27 percent in the quarter ended June 30 from 1.3 percent, a year earlier.

Net income fell by more than a third to $225 million, or 25 cents per share, in the quarter ended June 30, but topped the average analyst estimate of 20 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 12.8 percent to $9.22 billion, beating the average estimate of $9.03 billion.

T-Mobile shares were down slightly at $44.84. Up to Tuesday's close, the stock had risen 15 percent this year.

(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Kirti Pandey)