T-Mobile US growth results down from last year, but still trumps rivals
Unless Sprint pulls something out of its hat when it reports quarterly results next week, T-Mobile US can now officially call itself the nation’s No. 3 mobile operator in terms of customer base.
That outcome follows another robust quarter of net connection additions for T-Mobile US, which said it added 1.8 million connections during the first quarter of this year, pushing its total connection base to 56.8 million connections. Sprint said it ended 2014 with 55.9 million total connections on its network, which included nearly 1 million net additions for the final three months of last year.
During the past three months, speculation has raged over how legitimate those numbers are, with some published reports indicating up to 1.7 million of Sprint’s connections through wholesale partners had been inactive for at least six months. T-Mobile US CEO John Legere took that situation to bolster his previous forecast that T-Mobile US would be the No. 3 operator by the end of last year, a prediction he was forced to admit may have been a bit off following the numbers released from Sprint.
T-Mobile US’ latest result was down significantly from the nearly 2.4 million net connections it added during Q1 last year, with the difference coming from its branded offering. The carrier said it added 1.1 million postpaid customers, down from 1.3 million last year; 1.2 million prepaid customers, which was down from 1.8 million last year; and 620,000 wholesale connections through its machine-to-machine and mobile virtual network operator channels, which was an increase from the 603,000 connections added last year.
T-Mobile US’ results also look set to lead the market, with Verizon Wireless previously reporting approximately 777,000 net additions through its direct and wholesale channels. AT&T Mobility said it added 1.2 million net connections during Q1.
Despite the year-over-year dip in customer growth, T-Mobile US managed to trim postpaid churn from 1.47% last year to 1.3% this year, although prepaid churn increased from 4.34% to 4.62%.
T-Mobile US also noted that “phones” made up a vast majority of its postpaid net additions, which is counter to what its larger rivals showed in which most of their postpaid growth was coming from tablet sales. That’s a significant financial distinction as phones typically require a higher monthly rate plan than tablet devices.
The carrier reported a continued drop in postpaid average revenue per user, falling from $50.48 during Q1 last year to $46.43 this year. When including monthly device payments, postpaid ARPU increased $1.40 year-over-year to $60.94. Prepaid ARPU also showed a strong increase, moving from $36.09 last year to $37.81 this year.
On a per-account basis, T-Mobile US said the number of postpaid devices increased from 2.18 during Q1 last year to 2.39 devices per account this year. Average revenue per account dropped 93 cents on a service basis to $108.04, but increased $15.29 per account when factoring in device payments.
With nearly 8 million more connections compared with Q1 last year, total revenue spiked from $6.9 billion to nearly $7.8 billion during Q1 2015. The result was down sequentially from the $8.154 billion posted during the final three months of last year.
Total expenses witnessed a slightly smaller year-over-year increase, pushing from $6.9 billion last year to nearly $7.7 billion this year. Capital expenses on property and equipment remained relatively flat year-over-year at just under $1 billion for Q1.
The difference helped T-Mobile US trim quarterly net losses attributed to shareholders from $151 million last year to $77 million this year.
Looking ahead, T-Mobile US raised its full-year guidance for net connections from between 2.2 million and 3 million connections to between 3 million and 3.5 million net additions. The carrier added more than 8 million net connections in 2014.
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