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T-Mobile US adds 2.2m customers and raises 2016 expectations

John Legere, Braxton Carter

T-Mobile US has announced an impressive range of Q1 2016 results including subscriber gain, revenue growth, churn reduction and an improved forecast for the rest of the year.

The US’s third largest carrier grew its user base by 2.2m net additions in the first quarter of the year, which it claims is the 12th consecutive quarter of over 1 million additions and 2m additions for the sixth quarter out of seven. Of the 2.2m additions, more than 1m are postpaid (pay monthly), while 800,000 come from prepaid (PAYG).

The customer growth, while impressive, is indicative of a growing US market in any case. Analyst firm Ovum suggests the US market will grow from 408m to 415m in the quarter ending March 2016. Of the estimated 7m growth, T-Mo makes up 2.2m of that, AT&T  1.8m, Verizon 2.2m and Sprint just 500,000. Interestingly, a year ago T-Mobile overtook Sprint in terms of pure subscriber numbers for the first time, at 56.8m – it is now more than 7 million clear.

In terms of revenue, T-Mobile generated $6.6bn in service revenues, up 13% year-on-year, which the carrier believes will lead the market for an 8th successive quarter. In total, the carrier posted $8.6bn in total revenues, up an impressive 10.6% YoY.

“I can’t think of a better way to start off 2016 than by capturing all of the industry’s postpaid phone growth – again!” said CEO John Legere. “Our model is working and the business momentum is accelerating across the board. Customers are joining the Un-carrier revolution and that is producing incredible financial results.”

While average revenue per user is down roughly 4% sequentially and 0.5% year-on-year, T-Mobile claims this is down to its Data Stash service, which allows users to carry over unused data on a monthly basis. Excluding Data Stash, T-Mo says ARPU was “generally stable” both sequentially and year-on-year.

Elsewhere, the telco explained its cash capital expenditure of $1.3bn is largely down to acquisitions of spectrum in the 700 MHz A-block in an effort to broaden the coverage and boost the speed of its LTE network infrastructure. The $1.3bn capex is up 30% YoY, but down from $1.4bn sequentially. T-Mobile has also filed to participate in the upcoming 600 MHz broadcast incentive auction.

As a result of a high-performance quarter, T-Mobile has raised its forecast for the rest of the year, announcing net customer addition expectations from 2.4-3.4 million to 3.2-3.6 million. It also expects adjusted EBITDA to be up to $10.2bn, up from a previous estimate of as much as $9.7bn.


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