T-Mobile Posts 786K Net Adds, Record Service Revenue in 2Q

Analysts earlier this week predicted T-Mobile would once again be at the top of the pack in the second quarter, and the report the Un-carrier dropped on Wednesday will be hard to beat.

T-Mobile posted total net additions of 1.3 million, including 817,000 total branded postpaid net additions and 786,000 postpaid phone net additions. Postpaid phone churn was down both year over year and sequentially to 1.10 percent. Revenues were up across the board – with total revenues up 10 percent year over year to $10.2 billion and record-high service revenues that grew 8 percent to $7.4 billion in the quarter. Earnings per share came in at 67 cents.

Nearly all of these numbers beat forecasts from Wells Fargo Securities, which had predicted total revenue of $9.9 billion, 602,000 postpaid phone net additions, and earnings per share of 29 cents. Only service revenue fell slightly short of the $7.54 billion estimated by Wells Fargo.

During Wednesday’s earnings call, T-Mobile CEO John Legere noted the Un-carrier “continues to perform at peak levels across the board.” Legere added that rivals were “choking” under the weight of their unlimited rollouts, and noted porting ratios remained strong against T-Mobile’s top three competitors.

“These amazing results across the board are at a large part due to investments we have made and we will continue to make in our network,” Legere added. “No magic tricks here, just good old-fashioned focus and execution from Neville Ray and the engineering rock stars.”

Prepaid lags

One notable aberration in the report, however, was T-Mobile’s prepaid net addition figure. That number dropped substantially, coming in at only 94,000 in the second quarter compared to 386,000 in the first quarter 2016 and 476,000 the year prior. But Legere and COO Mike Sievert brushed this off during the call, noting that while T-Mobile decided not to respond to “irrational offers” from competitors, the company’s MetroPCS brand is still winning customers at “a healthy pace.” Legere said prepaid ARPU hit a new record of $38.65 in the quarter.

“This quarter again has the largest prepaid provider in the industry with 20 million subscribers, and we were able to again post growth in a very interesting and tough competitive situation, while also achieving the highest ARPUs in our company’s history on prepaid. So we are really proud of that,” Sievert commented.

Sievert added the number of customers on MetroPCS is on pace to double the 8.9 million who transferred with the merger in 2013 by the end of this year.

“When companies merge, the big question that’s asked usually is how many will they be able to hang on, how many will be able to entice to stay. Instead, our MetroPCS team, led by Tom Keys, has engineered a doubling of that business. We believe we will hit that milestone during fourth quarter,” he said.

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