T-Mobile US’ breakout second quarter looks set to continue as channel checks conducted by a financial analyst showed ongoing momentum for the carrier.
According to Jennifer Fritzsche, senior analyst at Wells Fargo Securities, T-Mobile US is seeing strong share growth at the expense of Sprint as well as former non-contract MetroPCS customers migrating over to T-Mobile US’ Simple Choice rate plans.
“While porting trends have been positive toward Sprint vs. [T-Mobile US] in most quarters before Q2 [2013], since [T-Mobile US] got the iPhone in April, our checks show [T-Mobile US] has gained significant share from Sprint,” Fritzsche wrote in a research note. “This seems to be especially true since the formal close of the iDEN network in late June. While our checks show [Verizon Wireless] is taking more of the Sprint mixed account (accounts which had both CDMA and iDEN) customers, we believe [T-Mobile US] is gaining share from [Sprint] in one-line individual consumer accounts and taking advantage of Sprint’s lower media spend.”
T-Mobile US reported industry-leading customer growth during the second quarter, including 1.1 million net customer additions following the closing of its acquisition of MetroPCS. That growth was bolstered by a healthy increase in gross customer additions that offset an increase in customer churn from 2.9% to 3%. Analysts noted that T-Mobile US’ marketing push surrounding its “un-carrier” tag line and a full quarter of offering Apple’s iPhone product line attracted a lot of new customers. T-Mobile US did note that iPhone sales represented just 29% of gross customer additions for the quarter. T-Mobile US said it expected direct postpaid net customer additions to come in at around 1 million to 1.2 million customers for all of 2013, suggesting it expects second-half growth to fall just short of what the carrier managed to post during the second quarter.
Fritzsche said she thinks current estimates for customer growth during the third quarter were on the low side, upgrading her forecasts for postpaid net additions from 212,000 customers to 425,000 net customer additions. Fritzsche added that the carrier will then see an uptick in prepaid growth during the fourth quarter as T-Mobile US continues to further expand the reach of MetroPCS-branded services into new markets.
As for Sprint, analysts are preparing for a rough end to 2013 as the carrier continues to work through its Network Vision build out, LTE deployment and integration issues tied to its acquisition by Japan’s Softbank and acquisition of Clearwire. Sprint reported the loss of more than 2 million customers during the second quarter, with much of that deficit tied to its turning down of its iDEN services. Sprint’s management has hinted that it expects to continue struggling through the remainder of 2013 with customer losses in the face of intense competitive pressure, with a turnaround not expected until well into 2014.
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