This could be the start of something good for T-Mobile USA.
America's fourth-largest mobile operator this week reported subscriber growth for the first time in more than two years. The carrier announced in its second-quarter earnings report that it added a net of 1.1 million subscribers between April and June, the highest rate of growth among all of the national providers.
Nearly 700,000 of those additions are from T-Mobile's postpaid plans. That compares to a net loss of 557,000 postpaid customers in the year-ago quarter. While the carrier recently did away with service contracts, it still allows customers with decent credit scores to pay at the end of the month, rather than at the beginning.
The Bellevue, Wash.-based carrier, which closed on its acquisition of MetroPCS last quarter, also got nearly 9 million new customers from that transaction, ending Q2 with 44 million customers.
It wasn't all good news for T-Mo. The company reported a loss of $16 million, despite the fact that revenue rose almost 28 percent.
“A return to overall subscriber growth and, in particular a big boost in relatively higher value postpaid subs, is nothing but good news for T-Mobile," noted Yankee Group senior analyst Rich Karpinski, commenting specifically on a CNET article. "Sure, ARPU may be falling for those customers (versus past postpaid ARPU results), but that’s to be expected with its move to across-the-board value pricing. The problem would be if they were NOT growing customers at this point. DT’s commitment to grow marketing spend the rest of the year is great news as well; that alone should keep T-Mobile moving in a positive direction. The real key will be to integrate and refarm MetroPCS spectrum as quickly as possible while moving to LTE-Advanced to be able to significantly lower its network costs at around the same time it is likely to cut back on marketing spend. By then, especially with continued innovation on the device and service pricing side, it just may have the monetization AND loyalty-creation engine it needs to successfully execute its ‘value bit mover’ strategy. In short, what we see today is a well-done execution of phase one of what is still a multi-phase, multi-year turnaround strategy."
Canaccord Genuity analyst Greg Miller, saying his faith is restored in the company, increased his price target for T-Mobile's stock on the news, from $22 to $25.
“With new leadership and with the benefit of the MetroPCS brand name, it appears that [T-Mobile] has returned to the U.S. wireless market a much more formidable competitor than we have witnessed in some time," Miller said. "Subscriber growth in the company’s first full quarter was very strong. We believe the network quality will only continue to improve, thereby improving customer perception and reducing churn."
This is the first time T-Mobile has reported its numbers as an independent company. It spun off of Deutsche Telekom in May when it merged with MetroPCS and became its own entity.
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