The ‘un-carrier’ scores 617,000 branded postpaid phone net additions
On the heels of its announced intention to merge with Sprint, T-Mobile US put up continued strong growth, bringing in more than 600,000 branded postpaid phone net additions for the quarter and service revenues that increased 6.5% year-over-year.
T-Mobile US ended the quarter with about 74 million connections on its network. T-Mobile US had 1.4 million net new connections added in the first quarter of 2018, of which about 1 million were postpaid additions. Of that 1 million, there were 617,000 branded postpaid phone net adds and nearly 390,000 other devices added, which the carrier said was “primarily driven by higher connected devices,” and specifically called out the Apple watch.
T-Mobile US reported that branded postpaid phone churn was at a record-low figure of 1.07%. Meanwhile, the company did see a significant fall-off in its prepaid numbers — from 386,000 in the first quarter of 2017 to about 200,000 in the first quarter of 2018. T-Mo said that this was “due to increased competitive activity in the marketplace and higher deactivations from a growing customer base, partially offset by a higher impact from the optimization of our third-party distribution channels in the prior period, and lower migrations to branded postpaid plans.”
The carrier’s net income was down about 4% year-over-year to $671 million, which the company said was due to tax benefits and spectrum licence sales that were recorded in the first quarter of last year. Total revenues were up 8.8% year-over-year to $10.5 billion, while service revenues increased 6.5% year-over-year to $7.8 billion.
T-Mobile US noted a number of network-related projects on its to-do list for the year, including covering three million more potential customers by the end of 2018 to bring its total covered population to 325 million; continue clearing its 600 MHz spectrum, with spectrum covering 120 million POPs expected to be cleared this year; and bringing dual connectivity to its network with some of its millimeter wave holdings. T-Mo said that it “will be bringing 5G to 30 cities in 2018 using both 600 MHz and millimeter wave spectrum. The network will harness 4G and 5G bandwidths simultaneously … and will be ready for the introduction of the first 5G smartphones in the first half of 2019.”
Given the splash that the carrier made earlier this week with the news of a renewed effort to merge with Sprint, most analyst questions on the quarterly call focused on the implications of that transaction. CEO John Legere said that the company is beginning its work on educating both shareholders and regulators about the deal, but that T-Mobile US is “extremely confident” in its ability to execute on the plans it has sketched out, including a high-capacity, high-speed mobile network that will be able to rival wireline providers, expanded service and retail presence in rural America, and a combined company that employs more people than Sprint and T-Mobile US do as separate companies. T-Mobile US plans to reap major benefits from decommissioning about 35,000 sites over a three-year network integration period, and CTO Neville Ray said on the quarterly call that some of the estimated synergies come from an additional estimated 16,000 sites that would have needed to be built if each carrier were to remain separate, whose cost will be avoided.
CEO John Legere, when asked about the potential for a quad-play bundle for the combined company, noted that T-Mobile US bought Layer 3 TVÂ earlier this year with the intent to enter the TV market. With the Sprint merger, he went on, “those aspirations get ratcheted up.”
Ray also offered a bit more insight into the four-year roaming agreement that T-Mobile US put together with Sprint, which went into effect immediately and will survive whether or not the merger goes through. That’s limited to LTE data roaming; T-Mobile US execs called it a way of monetizing their network without impacting their own customers’ capacity needs.
AT&T and Verizon have already reported their quarterly numbers; Sprint will report theirs after market close on Wednesday.
