T-Mobile adds a whopping 2.4 million subscribers in the first quarter
T-Mobile also saw its churn decrease markedly over a year ago, and sequentially from the previous quarter. CEO John Legere noted that T-Mobile is approaching 50 million total customers.
The subscriber numbers include postpaid, prepaid, branded, and non-branded. This report marks a first time the carrier added more than 2 million customers in a single quarter. The lower churn numbers also indicate Team Magenta has a bit of staying power, though that was also aided by the carrier’s industry changing equipment installment plans, of which T-Mobile says there are over 5.3 million customers enrolled in JUMP!.
The stellar customer adds do not come without a cost, however. T-Mobile posted a loss of $151 million on $6.88 billion revenue for the quarter, which missed the $6.92 billion target slightly. For the same quarter last year, T-Mobile posed a $107 million profit. Average revenue per user dipped a bit, 1.4%, to $50 per-month.
The financials did not hurt T-Mobile’s stock and the subscriber additions have steered the carrier’s projections for the rest of the year upward from a bit under 3 million to about 3.3 million, meaning, T-Mobile expects to be adding north of 1 million customers for each remaining quarter in 2014.
“A year ago I promised that we would bring change to what I called this arrogant US wireless industry. We are delivering on that promise and our results reflect the growing customer revolution that we’ve ignited,” said John Legere
Company Release - 05/01/2014 06:00
2.4 million total net customer additions including over 1.3 million branded postpaid net customer additions
BELLEVUE, Wash.--(BUSINESS WIRE)-- T-Mobile US, Inc. (NYSE: TMUS):
First Quarter 2014 Highlights:
Total net additions of 2.4 million, marking the first quarter ever with more than 2 million net additions
Fourth consecutive quarter with over 1 million total net additions, now the fastest growing wireless company
Total branded net additions of 1.8 million including branded postpaid net additions of over 1.3 million
Total branded prepaid customer growth with 465,000 net additions
Record low branded postpaid churn of 1.5%, down 20 basis points sequentially and down 40 basis points YoY
Fourth consecutive quarter of pro forma sequential service revenue growth and a return to service revenue growth YoY on a pro forma combined basis
Adjusted EBITDA of $1.1 billion, down 12.2% sequentially due to the impact of significant acceleration in customer growth
Branded postpaid ARPU of $50.01, down 1.4% sequentially compared to a 2.9% decline in the prior quarter
T-Mobile US, Inc. (NYSE: TMUS) today reported first quarter 2014 results demonstrating continued strong momentum and record customer response to its Un-carrier moves. The Company has aggressively focused on eliminating consumer pain points and is delivering continued growth in its total and branded customer base through the successful execution of this strategy. In the first quarter, T-Mobile captured virtually all of the industry phone growth, while successfully taking market share from the competition.
T-Mobile reported 2.4 million total net customer additions with 1.8 million total branded net customer additions for the quarter, including branded postpaid net additions of 1.3 million and branded prepaid net additions of 465,000. T-Mobile was once again the fastest growing wireless company in America in the first quarter of 2014 with more than 1.2 million branded postpaid phone net additions, a result that dramatically outperformed the competition. The strong branded postpaid net addition performance resulted from continued momentum in gross additions, which were up 23% quarter-over-quarter and 136% year-over-year, and ongoing improvements in branded postpaid churn, which was 1.5% in the quarter, down 20 basis points quarter-over-quarter and down 40 basis points year-over-year.
“A year ago I promised that we would bring change to what I called this arrogant US wireless industry. We are delivering on that promise and our results reflect the growing customer revolution that we’ve ignited,” said John Legere, President and CEO of T-Mobile. “We are now approaching 50 million customers, added 2.4 million net new customers in the first quarter alone, and posted our fourth quarter of consecutive service revenue growth, while once again adding more net new postpaid customers than the rest of the industry combined!”
Executing on the Un-Carrier strategy to drive results:
T-Mobile’s Un-carrier moves have ushered in a consumer revolution, giving consumers a stronger voice since the roll out began in March 2013. The Company’s key Un-carrier initiatives were as follows:
- On March 26, 2013, the Company announced its radically simplified unlimited “Simple Choice” service plan with no annual service contract. Device financing with the Equipment Installment Plan (EIP) provides qualifying customers with low out-of-pocket costs on some of the most popular devices available in the US wireless industry. As of the end of the first quarter of 2014, 75% of T-Mobile’s branded postpaid base was on Simple Choice/Value plans.
- On July 10, 2013, the Company unveiled JUMP!™, a groundbreaking approach to more frequent phone upgrades. T-Mobile had more than 5.3 million customers enrolled in JUMP! at the end of the first quarter of 2014.
- On October 9, 2013, the Company announced that it would make “the world your network – at no extra charge” - with unlimited data and texting worldwide in 100+ countries for Simple Choice customers. At the same time, T-Mobile announced that it had delivered nationwide 4G LTE in 233 metro areas covering 202 million people. Since then, Simple Choice with global data has expanded to 121 countries and destinations and 4G LTE coverage has increased to 284 metro areas covering more than 220 million people.
- On October 23, 2013, the Company un-leashed tablets and revolutionized how customers buy and use tablets with free data for life. Customers can receive 200 MB of free data every month with any compatible tablet for as long as they own and use the registered device on T-Mobile’s network. In the first quarter of 2014, T-Mobile had 67,000 mobile broadband branded postpaid net additions, principally composed of tablets, compared to 69,000 in the fourth quarter of 2013.
- On January 8, 2014, the Company announced that it would reimburse Early Termination Fees (ETFs) for individuals and families who make the switch to T-Mobile and trade in an eligible device. The plan also offers a trade-in value for customers’ phones. This program has seen unprecedented customer uptake with approximately 21% of branded postpaid gross adds taking the ETF offer in the first quarter of 2014.
- In April 2014, the Company introduced 3 new programs - “Simple Starter,” “Tablet Freedom,” and “Overage Freedom” – that make our service plans and devices even more affordable, and we have eliminated all domestic overage charges for consumers, even those on legacy plans.
Operational and Financial Highlights for the First Quarter of 2014
T-Mobile ended the first quarter of 2014 with approximately 49.1 million customers, an increase of 2.4 million total customers from the end of the fourth quarter of 2013. T-Mobile significantly grew its total branded customer base, with 1.8 million net customer additions during the quarter. Branded postpaid net customer additions of 1.3 million, including more than 1.2 million phone net additions, continued the strong momentum seen in the previous three quarters, reflecting continued low branded postpaid churn and significantly higher gross additions. The Company’s network modernization program and strong execution of its Un-carrier strategy contributed to a record low branded postpaid churn rate of approximately 1.5% for the first quarter of 2014, down 20 basis points versus the fourth quarter of 2013 and an improvement of 40 basis points compared to the first quarter of 2013. The branded prepaid business exhibited improved customer growth with 465,000 branded prepaid net customer additions in the first quarter of 2014, driven by the success of MetroPCS and growth in the 30 expansion markets launched in 2013.
During the first quarter of 2014, the quality of T-Mobile’s customer base and receivables portfolio continued to improve as a result of the implementation of its Un-carrier strategy and the effect of credit tightening over the past two years. Service bad debt expense in the first quarter of 2014 was down 3% year-over-year and was down 13% quarter-over-quarter. 53% of EIP receivables were classified as Prime at the end of the first quarter of 2014, compared to 44% at the end of the first quarter of 2013 and 54% at the end of the fourth quarter of 2013. The slight sequential decline in EIP receivables classified as Prime was due to seasonal factors, most notably the tax season cash effect which drove a slight change in customer mix.
Total revenues for the first quarter of 2014 increased by 47.0% year-over-year, principally due to the inclusion of MetroPCS results in the first quarter of 2014. On a pro forma combined basis, total revenues for the first quarter of 2014 increased 15.3% year-over-year due to higher equipment sales and growth in service revenues. Total smartphone sales, including sales to branded postpaid and prepaid customers, were a record 6.9 million units in the first quarter of 2014, equivalent to 92% of total units sold, up from 91% in the fourth quarter of 2013. This represents a penetration of 81% of the total branded customer base at the end of the first quarter of 2014, up from 79% at the end of the fourth quarter of 2013. On a sequential basis, total revenues increased by 0.7% primarily due to growth in service revenues. The portion of branded postpaid customers on Value or Simple Choice plans was 75% at the end of the first quarter of 2014, up from 69% at the end of the fourth quarter of 2013.
Service revenues for the first quarter of 2014 grew by 33.3% year-over-year primarily due to the inclusion of MetroPCS results for the full quarter. Service revenues increased by 3.3% quarter-over-quarter primarily due to growth of the Company’s customer base, offset in part by increased adoption of Value and Simple Choice plans, which have lower monthly service charges than traditional bundled plans. T-Mobile’s service revenues have grown in each of the last four quarters on a sequential basis. On a pro forma combined basis, service revenues for the first quarter of 2014 increased 4.5% year-over-year. This represents a significant improvement over the fourth quarter of 2013, when service revenues declined by 1.1% year-over-year on a pro forma combined basis, and marks a return to year-over-year service revenue growth.
Branded postpaid average revenue per user (ARPU) decreased quarter-over-quarter by $0.69 or 1.4% to $50.01, an improvement compared to the quarter-over-quarter decline of 2.9% in the fourth quarter of 2013. Branded postpaid ARPU again declined on a year-over-year basis due to the increased adoption of Value and Simple Choice plans. However, the year-over-year decline in branded postpaid ARPU of 7.5% did show an improvement compared to the year-over-year decline of 8.6% in the fourth quarter of 2013. Branded postpaid Average Billings per User (ABPU), which consists of branded postpaid service revenues plus EIP billings divided by the average branded postpaid customers in the period, was $59.54 in the first quarter of 2014, up 3.9% compared to the first quarter of 2013 and up 1.3% compared to the fourth quarter of 2013. Branded prepaid ARPU for the first quarter of 2014 increased by $0.25 or 0.7% to $36.09 compared to the fourth quarter of 2013.
Adjusted EBITDA for the first quarter of 2014 was $1.1 billion, a 12.2% decline from the fourth quarter of 2013, reflecting increased equipment sales due to the significant acceleration in customer growth and the success of the Un-carrier 4.0 – Contract Freedom offer. Adjusted EBITDA margin was 20% compared to 24% in the fourth quarter of 2013.
Cash capital expenditures for the first quarter of 2014 were $947 million, up from $882 million in the fourth quarter of 2013 but down from $1.2 billion on a pro forma combined basis in the first quarter of 2013. Cash capital expenditures reflect T-Mobile’s continued investment in network modernization and 4G LTE deployment.
T-Mobile has continued to make rapid progress on the expansion and integration of MetroPCS. On July 25, 2013, the Company announced the strategic expansion of the MetroPCS brand with the planned launch of 15 new geographic markets. On November 21, 2013 the Company launched the MetroPCS brand in 15 further markets, bringing the total of expansion markets to 30. As of March 31, 2014, the Company has opened nearly 2,200 distribution points in these new markets.
The Company began selling T-Mobile-compatible devices to MetroPCS customers in the second quarter of 2013 through MetroPCS branded distribution points and has already transitioned approximately 53% of MetroPCS customers to the T-Mobile network. More than 50% of the MetroPCS spectrum has been re-farmed and integrated into the T-Mobile network at the end of the first quarter of 2014.
2014 Outlook Guidance
T-Mobile expects to drive further momentum while continuing to invest in profitable growth. With the success of our Simple Choice plan and the continued evolution of the Un-carrier strategy, branded postpaid net additions for 2014 are now expected to be between 2.8 and 3.3 million.
For the full year of 2014, T-Mobile now expects Adjusted EBITDA to be in the range of $5.6 to $5.8 billion.
Cash capital expenditures are expected to be in the range of $4.3 to $4.6 billion.
With this growth and rate plan migrations, the penetration of Value/Simple Choice plans in the branded postpaid base is projected to be between 85% and 90% by the end of 2014.
1. sriuslywtf (Posts: 258; Member since: 09 Jul 2013)
Well.. With John L on the seat... T-Mo can compete..
3. Droid_X_Doug (Posts: 5854; Member since: 22 Dec 2010)
Is it any wonder why Son-boy wants T-Mo? Sprint is on a fast track to nowhere, and Son knows it.
23. lsutigers (Posts: 739; Member since: 08 Mar 2009)
Problem is TMO cannot sustain this. They are adding customers by giving away the farm. TMO is attracting the least profitable customers and now has the lowest ARPU of the big 4 by a long shot. While it may look impressive initially, its not all about subscriber numbers, particularly when you are losing money.
29. tuminatr (Posts: 682; Member since: 23 Feb 2009)
they have already started to change their ways No more coperate or school discounts. I bet they stop the we pay your ETF
2. ErenJaeger (Posts: 119; Member since: 22 Apr 2014)
T-Mobile is awesome but please bring back $70 unlimited data and student discounts. :)
4. Planterz (Posts: 887; Member since: 30 Apr 2012)
I'm one of those 2.4mil. Unlimited data + PdaNet (be sure to hide tether usage) means I don't need cable at home, where I get 20-40+Mb/s (depending on time of day), faster than I got with cable.
Switching from Verizon has greatly improved my life. It might sound silly, but not having to worry about little things like updating apps off Burger King's hotspot to preserve my measley 4gb data cap (or pay $10/GB extra), being able to use Netflix, youtube, or download torrents with no restrictions...all that makes my life easier and more enjoyable. One can't put a price on peace of mind, but in the case of my cell phone provider, peace of mind with T-M costs a hell of a lot less than Verizon charged me for worry and restrictions.
12. Planterz (Posts: 887; Member since: 30 Apr 2012)
A bit. But that doesn't make what I said any less true.
8. fzacek (Posts: 1862; Member since: 26 Jan 2014)
I'm one of them too. Verizon is a horrible service provider, it just rips people off so hard...
13. Planterz (Posts: 887; Member since: 30 Apr 2012)
Verizon's coverage is unmatched, which is what some people need. I barely leave town, so that's not what I need. I need the freedom of unlimited. I wouldn't call Verizon horrible. Horrible for me, yes, but potentially ideal for others.
14. fzacek (Posts: 1862; Member since: 26 Jan 2014)
But is it really worth it to pay twice as much as you would be paying with a different carrier for a little more coverage?
16. Planterz (Posts: 887; Member since: 30 Apr 2012)
I didn't think about T-M's non-unlimited plans. That's a good point.
17. jroc74 (Posts: 4934; Member since: 30 Dec 2010)
If lil more coverage means I can use my Verizon reliably phone in areas I struggle with Sprint and T Mo...areas I live n work in....
When having reliable service means not missing out on jobs, appointments, family emergencies....or making calls about those things...
That said...I am no longer with Verizon...and I dont plan on going back. AT&T and T Mo will be getting my money...either the carrier or their pre paid ones.
20. downbeat4 (Posts: 71; Member since: 03 Dec 2010)
A little more coverage?? That's hilarious. Give people unlimited 2G and they become as blind as Apple customers. TMobile is making some great changes, but be honest, their coverage sucks. Now, if it happens to be good at your home by some miracle and that's whereyou spend most of your time than that it's great. But the reality is people are all over the place during the day sometimes for work. I would actually say a large percentage of people and T Mobile's coverage is so unbearably spotty that you can't even cpmpare it to VZW. Just the fact that their unlimited(as long as you're on their tower) is for 2G is good enough reason to stay away. Who wants to go from 10mbps+ to 128kbps. Ever use a smartphone connected to 128kbps? Most people haven't since 2006.
22. Planterz (Posts: 887; Member since: 30 Apr 2012)
I literally live underneath T-Mobile equipement. My place of employment is between 2 towers (meaning my signal is at the weakest spot), and even then, my speeds are faster than Verizon's are. There, things take a bit longer to initiate connections, but go fast enough once started. I have zero problems with youtube videos (once they load), or Pandora/Milk/Tune In. This is in Tucson, AZ.
People need to go tohttp://www.sensorly.com/ to check actual coverage for their prospective providers.
And you, downbeat4, need to learn some grade-school grammar.
24. downbeat4 (Posts: 71; Member since: 03 Dec 2010)
You're right...about my grammar, but I was multitasking at the time so I'll take a mulligan. It appears you are one of the lucky ones. I guess that I just feel assured knowing that I can drive for 5 hours in any direction and have blazing fast 4G LTE 95% of the time (10-62mbps). Not to mention using as much of my tiered data I'd like with my MHS....and no domestic roaming. Having to cough up an extra $10-$15 w/ VZW should I go over my limit, is preferable to having to be throttled down to 2G speeds once I reach my "4G allotment" or to not have any data connection at all w/ TM because I've used up my Domestic Roaming during a day trip out of the city. Look, I love that TM has shook up the industry. It has forced other carriers to lower their prices...Verizon included. To each his own.
28. rdaex (Posts: 91; Member since: 24 Oct 2012)
How is it possible you dont know TMO has a unlimited LTE plan??
31. treflip (Posts: 2; Member since: 05 May 2014)
i switched from from verizon. no signal problems. I'm all over the place too. lte is everywhere. get off verizons nuts they are the crap.
25. Jommick (Posts: 207; Member since: 10 Sep 2013)
If you own or work for a company that requires road travel in any capacity, having more coverage certainly makes sense.
Especially on the ownership end when it's a tax write off at the end of the year.
27. networkdood (Posts: 6274; Member since: 31 Mar 2010)
Hey, I switched from Verizon to AT&T prepaid in August and then to T Mobile in December - so glad to get rid of SlooooooRizon....
30. treflip (Posts: 2; Member since: 05 May 2014)
I switched from verizon also. Paying way to much. I have unlimited lte and everything else for half the price. no waiting 2 years for an upgrade. so hyped i switched.
5. theo14461 (Posts: 165; Member since: 08 Oct 2009)
I had T-Mobile in the past and hated their network coverage. I went back to them with the S5, and I have to admit, they've come a long way. Thank you T-Mobile!
6. JunitoNH (Posts: 927; Member since: 15 Feb 2012)
Alright T-Mobile, 40 million subscribers to go. Right now, T is giving everything away, including the kitchen sink, to attract new sub. However, for how long? eventually prices are going to have to go up to keep up with the big boys.
10. wilsong17 (Posts: 962; Member since: 10 Mar 2013)
My lte speed sick on tha
15. Planterz (Posts: 887; Member since: 30 Apr 2012)
Image doesn't show. Does it beat mine?
mg.php?image=000066779_Screens hot_2014_03_14_02_09_51_122_41 6lo.jpg
19. wilsong17 (Posts: 962; Member since: 10 Mar 2013)
21. Planterz (Posts: 887; Member since: 30 Apr 2012)
What phone do you use? I like the notification icons (especially the battery guage). Are you using a custom rom or Xposed modules?
11. tedkord (Posts: 4936; Member since: 17 Jun 2009)
I think the first line should read "enviable subscriber additions."
18. baldilocks (Posts: 519; Member since: 14 Dec 2008)
Now they just need coverage in places OTHER than cities and major roads. They are a no go where I need them.