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T-Mobile's outlook for subscriber growth brightens
[NEW YORK] T-Mobile US Inc will gain more subscribers than expected this year amid intensified competition from Verizon Communications Inc and AT&T Inc, even if it means taking a hit on profit.
The third-largest US wireless carrier will add 2.8 million to 3.5 million customers this year, up from an originally forecast range of 2.4 million to 3.4 million, according to a statement Monday. At the same time, the Bellevue, Washington-based company maintained its profit outlook for 2017, suggesting the cost to get those new customers in the door will offset the additional earnings they generate.
Even at the higher end, those subscribers additions would mark a slight slowdown for the fastest-growing US wireless carrier. Last year the company garnered 4.1 million new monthly subscribers, nearly double that of Verizon.
Shares of T-Mobile fell less than one per cent to US$65.69 in late trading Monday.
T-Mobile is eager to keep expanding its subscriber rolls to put pressure on its bigger rivals. Verizon and AT&T are now aggressively marketing mobile-phone packages that include unlimited data - a tacit acknowledgment that the carrier has struck a chord with consumers who want to stream video without worrying about exceeding a cap.
T-Mobile signed 914,000 new customers in the first quarter, more than the 820,000 analysts were expecting. The gain helped the company post profit excluding some items of 48 cents a share, beating analysts' 35-cent average estimate.
Showing investors it can add new customers while also protecting profit will be critical for T-Mobile this year, as price wars roil the industry. Verizon's decision to start unlimited data services sent the shares sinking of almost every telecom stock in February, as investors feared the collateral damage of a prolonged pricing battle.
T-Mobile maintained its forecast for 2017 adjusted earnings before interest, taxes, depreciation and amortisation of US$10.4 billion to US$10.8 billion, with analysts expecting US$10.7 billion on average. Last year T-Mobile posted adjusted Ebitda of US$10.4 billion.
Chief executive officer John Legere said the company counted four days in the first quarter that Verizon stole T-Mobile customers. The company is taking market share so far in the second quarter, he said on a conference call.
Reversal of Fortunes T-Mobile's latest performance may add more pressure on Verizon and Sprint Corp to explore potential deals to improve their fortunes.
T-Mobile's streak contrasts with Verizon's record subscriber loss reported last week. With growth stalling, Verizon said it is open to take M&A inquiries from Comcast Corp or Walt Disney Co in search of a transformative deal that would make the carrier less vulnerable to its mature wireless business. Sprint has also been jockeying for position in a consolidating market as a nearly yearlong airwaves-auction quiet period lifts Thursday.