Subscriber additions drive T-Mobile’s profit beat, forecast – Metro US

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

Subscriber additions drive T-Mobile’s profit beat, forecast
By Malathi Nayak and Aishwarya Venugopal

By Malathi Nayak and Aishwarya Venugopal

(Reuters) – T-Mobile US Inc reported quarterly results that beat analysts’ estimates and raised its full-year subscriber growth forecast, as the No.3 U.S. wireless carrier posted customer gains that surpassed expectations.

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 free data for its users who play the popular smartphone game “Pokemon Go,” its free video streaming service “BingeOn” and “T-Mobile Tuesdays” weekly perks, such as free food and movie tickets, to attract users.

Such efforts 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 “T-Mobile Tuesdays” campaign has “increased the overall (T-Mobile) brand’s fame,” chief operating officer Mike Sievert said in an interview. “Our (subscriber) gains are coming from AT&T and Verizon’s postpaid base.”

The Bellevue, Washington-based 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 between 3.4 million and 3.8 million, a range of 3.2 million and 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 leave a service – 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 up 1.6 percent at $45.72 in afternoon trading on Wednesday. Up to Tuesday’s close, the stock had risen 15 percent this year.

(Reporting by Malathi Nayak in New York and Aishwarya Venugopal in Bengaluru; Editing by Nick Zieminski and Bernard Orr)