T-Mobile adds 2.5 million new customers in Q1 2014

T-Mobile US has published its Q1 2014 report. The company has reported its best ever quarterly performance in branded postpard net customer additions. A total net of 2.4 million customers were added, including over 1.3 million branded postpaid net customers. This report marks the first quarter the carrier has had with more than 2 million net customers added to plans. It's a stark contrast to Sprint, which is still experiencing issues upgrading its network while maintaining its customer base.

The carrier has illustrated a considerable positive response to its 'un-carrier' marketing. T-Mobile has been on the aggressive for some time, attempting to eliminate consumer pain points and simply making everything easier to digest. The report notes how T-Mobile is absorbing market share from the competition, which would also roll into play with Sprint's continued downfall.

Of course, President and CEO of T-Mobile, John Legere wasn't shy in boasting about the figures and performance. "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 Legere. "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!"

While many question Legere's presentations, something at the carrier most be winning consumers over. Whether it's the new simple choice plans without annual contracts, device financing or the value plans, T-Mobile is finding itself in a stronger position in the highly competitive US market. Total revenues for Q1 2014 was up by 47 percent year-over-year, primarily due to the inclusion of MetroPCS results. Smartphone sales were also strong at a record 6.9 million units in the first quarter, further penetrating into its customer base.

As an outlook for 2014, T-Mobile expects to drive further momentum while continuing to invest in profitable growth. Branded postpaid net additions for 2014 are expected to be between 2.8 and 3.3 million. Be sure to check out the full press release and investor resource for more details.

Source: Thomson Reuters

T-Mobile US Reports First Quarter 2014 Results

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

BELLEVUE, Wash. – May 1, 2014 – 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.

MetroPCS Combination

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.

Quarterly Financial Results For more details on T-Mobile's first quarter 2014 financial results, including its "Investor Quarterly" with detailed financial tables and the required non-GAAP reconciliations, please visit T-Mobile US, Inc.'s Investor Relations website at http://investor.T-Mobile.com.

For comparison purposes, pro forma combined measures presented in this release include the combined results of T-Mobile USA and MetroPCS to reflect the business combination for the relevant periods. See Investor Quarterly for further details.

 

Reader comments

T-Mobile adds 2.5 million new customers in Q1 2014

83 Comments

That number is misleading, let them give us numbers that stayed. I ported 4 of my family phones to T-mobile for 3 months, after they paid my ETF, I went back to AT&T because T-mobile services is not reliable. So about 40% that they gained, they lost

Posted via a sexy Nexus 5

"The company has reported its best ever quarterly performance in branded postpard net customer additions. A total net of 2.4 million customers were added, including over 1.3 million branded postpaid net customers"

It's "net" customers added, meaning it is total customers added minus customers lost.

So you say that number is not true....where do you get your info...oh wait your ported out of T-Mobile so I guess because you did that, the numbers are false.....give it a rest.

By way of Nexus 4 with Milk Music

Im just excited for the massive LTE expansion they are promising. Once I see their EDGE network finally start to disappear I will be jumping ship from Verizon.

Posted via Android Central App

EDGE ain't going to be disappearing. They've said that. All they're doing is upgrading their HSPA 4G with LTE, which has been the pattern for them. They just upgrade the same areas over and over while leaving the bulk of their network outside major cities on EDGE. They'll be calling for snowplows down below long before you see EDGE disappear on their network.

That's not true. Android Central did an article on March 13th called "T-Mobile's LTE rollout continues, 50% of EDGE to be converted to LTE by end of 2014" which contridicts what you just posted.

dude tats not true in the LEAST!! I can attest to tmobile building out their LTE in plenty of areas. i now have LTE at my house (i live in the middle of almost nowhere, not even close to a major metro area) and get LTE when i go into town. I used to get edge all over the place off and on. Now its pretty much LTE at 30mb +/-

I like when people post thinking they are correcting someone but they instead need correcting. EDGE going to be upgraded to LTE within 1 year, it has been said pretty clearly.

Not really. The first iPhone was EDGE only yet it still provided some Internet functionality. The problem is that people have become spoiled and thus think that anything slower than 30mbps is unacceptable.

Now they need to start making money. Can't give away the farm forever.

"The mobile service provider two-thirds owned by Deutsche Telekom AG lost $151 million, or 19 cents per share, in the quarter compared with a profit of $107 million, or 20 cents per share, a year earlier."

You think its cheap to take a fairly unreliable network, and make it strong along with upgrading to the latest tech?

go t-mobile! now you should buy sprint and convert their network into gsm and use the spectrum to better your network.

This is why I think a merger has to happen. They just don't have the capacity to sustain this growth without burning through cash. AT&T and Verizon are big enough to price war T-Mobile and Sprint into the ground if they want to. A merger with T-Mobile management in charge (which is the current rumor) needs to happen to have a viable threat to the big 2, IMHO.

That would be the only way I could stomach a merger with Sprint. Management at Sprint has been awful for years and Son might be realizing this now. Heck he knew the marketing was trash and canned them right away. Now most if not all of the people in charge need to go. Do the switch to LTE GSM and close the CDMA network down pronto and you have a viable carrier ready to take on the duopoly monster that is Big RED and BLUE.

As long as its TMO buying Sprint (or at least TMO the ones in charge) i would be down. But if it went the other way i would ditch TMO in a heart beat. I had sprint for several years ad they are crap.

Impressive numbers. This should send a strong message to Sprint's management that if the merger goes through, Tmobile should remain the face of the company, and they should continue with the "uncarrier" movement

Won't be that plucky 4th place carrier for much longer. They're gunning for 3rd with Sprints downfall.

Posted via Android Central App

I am one of those new subscribers. Glad I finally left VZW, and I am not looking back
(ノಠ益ಠ)ノ彡┻━┻

Legere is kicking ass and taking names. this guy deserves every penny of his compensation IMO. he's been a great disruptor in the industry and consumers are winning through increased competition. kudos to the FCC for blocking AT&T's move on T-Mob. hopefully they will block Sprint's move as well. having 4 major carriers in the U.S. helps keep the industry (more) honest.

"The report notes how T-Mobile is absorbing market share from the competition, which would also roll into play with Sprint's continued downfall."

Funny, I'll be switching from Sprint to T-Mo this quarter. It will be prepaid, but I'll be sending my money to Magenta nonetheless.

Posted from my 1st gen Nexus 7 via Android Central App

its all the same towers. I have never done the prepaid, but have been curious about it for a while. My only question is does post-paid customers get a "priority" over prepaid? If your on a tower that is congested and slowing, who gets put to the front of the line or is it first in first out? Thats my only concern.

In most cases branded postpaid users get priority over prepaid and MVNO users when there is heavy congestion / usage. Hour much that will affect you depends on you location and how many other users are in the area.

In my city racial demographics followed by economic demographics determine which carrier you'll most likely have.
It gets really upsetting when you can look at particular individuals and have a 90% correct carrier profile.

The discount cell phone company with discount (read horrible) customer service and discount (read mostly EDGE) network. Those suckers who took the bait will soon be fleeing out the back door once they find out there ain't no 4G coverage except in major cities.

wow. You are definately the life of the party huh? No one cares what you think. And you are TOTALLY wrong. obviously 2.4 million NET new subscribers. go troll somewhere else a$$ wad

"While many question Legere's presentations, something at the carrier most be winning consumers over."

Most of us don't care about presentation; we care about pricing, flexibility and service. And right now Tmobile is delivering that. Those of us who DO care about presentation mostly like the way he gives a big fat middle finger to the carriers stubbornly willing to continue doing business the old-fashioned way.

I personally LOVE the fact that he will drop an f bomb here or there. He is the ceo of a major company, but seems more like a regular guy than someone like Hesse (who has "i suck corporate penis" written all over his face)

misleading... the company is also bleeding money and long term it's just not gunna work...

Posted via Android Central App

they are paying millions of people's etfs and investing millions into the their slow rolling out 4g network how do u expect them to be making a profit it's not rocket science.

Posted via Android Central App

bleeding money... no, they are PUTTING money into upgrading their network like almost no other company is doing and FAST too.

pretty sure every carrier is investing money into their networks right now. Verizon and AT&T are adding bandwidth and Sprint and T-Mobile are playing catch up.....

Posted via Android Central App

Impressive. Good for them. I myself am loving the service. So many perks, told 2 of my friends and they've jumped on board as well.

Posted from my caseless GS5. Because I believe in myself.

GREAT for T-Mobile. Just keep improving the network and I may switch from Verizon Wireless....or I might stay,...lol, i don't know. Competition is good. What T-Mobile is doing is great for wireless consumers. Hopefully, what T-Mobile does or continues to do, will drive rates down and perhaps bring back unlimited data with Verizon and AT&T down.

I am happily one of of 2.4 that joined in Q1. I couldn't take the shackles of VZW anymore, and the fact that paid for me to bail, even better. Hello Nexus 5 and a grand future of being able to buy unlocked phones

Postpaid Subs by Carrier (Q1 2014):

Verizon - 97,273,000

AT&T - 73,291,000

Sprint - 30,257,000

T-Mobile - 23,622,000

Sprint and T-Mobile, even as a combined company, have a huge uphill climb to even get close to AT&T's postpaid subs.

I just left Sprint for T-Mobile. Was with sprint for 6 years but they forced me into the family crap by lieing to me. Jumped my already 240 buck a month bill to 290!!! After yelling at them for three months and getting nothing from them I ported.

T-Mobile actually has better signal at my work and home! Also max signal strength on Sprint yielded 6 meg down on LTE and maybe 2 up. T-Mobile max strength LTE hits 22 down and 12 up! Not to mention edge is WAY fast and more reliable than sprint 3g! No joke! Why did I ever switch....

As a Verizon subscriber I thank all the switchers. Verizon has been forced to make changes to their plan pricing such that, for my use case, it is actually cheaper than T-Mobile now. Competition is good

Posted via Android Central App

2 phones, 10gb share everything. Edge plan, 20% corporate discount, $10 (or $20 depending on how you look at it) discount because I also have fios triple play.

So that's $100-20%, +$15*2, - $10 = $100 + cost of phones (which is the same either place)

I use the bulk of that 10gb, so I'd need unlimited, and my wife would need the 3gb plan, so that's $120. Even if T-Mobile still gave the Corp discount it'd be basically the same.

I was surprised when I ran the numbers. And Verizon is much better for me because I travel a lot and while T-Mobile often has better speeds, Verizon has pretty good speed and much broader 4G coverage

Posted via Android Central App

True. I have 2 Verizon lines and I love what T-Mobile has done for the industry. That's why I also have 5 lines with them.

Posted via Android Central App

This is great news for consumers. Shows that t-mobile's aggressive new strategy is working and means Verizon and at&t are going to take (already happening). Honestly T-Mobile actions to improve the whole industry is why I haven't left them even though I could probably get better service for the same price with one of at&t's aio plans.

Posted via Android Central App

Admittedly, I've thought about switching. T-Mobile paying the early termination fee is an excellent deal. But I've stayed with my current carrier, for now.

Posted via AC App on HTC One

In my area, T-Mobile service is as good as (or better) than Verizon. I have multiple lines and with T-Mobile, the price difference puts gas in my car for a month. If you live where T-Mobile's service is comparable and cheaper to boot, then it is a no-brainer.

Add me to the list I joined last month. I was using a prepaid dumb flip phone from TMobile since 2007.

I was one of those joined my Fiance mobile plan my unlimited line is what $30/40 a month? I cant remember she pays for my bill aww isnt she sweet

I was with T-Mobile for 4 months. There speeds were fast and reliable when in a good coverage area. Just a couple miles down the road from my house it went to Edge and that's when it became slow and shotty. If the coverage was more widespread in my area I would have stayed. If your in a area with good T-Mobile coverage. Id say go for them. I respect them for taking the bold measures and tactics route. They have forced AT&T and Verizon to lower there plans and follow suit. I praise T-Mobile for this. The company took chance and its working.

Posted via Android Central App

I gave T-Mobile another try, so I signed up. Had to return it two days later. There was only 2G EDGE coverage in my area. Yes, only 2G. Not even 3G.... let alone 4G. :( The T-Mobile store manager had the balls to tell me that "2G is plenty fast for checking your emails and stuff.." What did he think this was, 1990? :( He sad the nearest place to get 3G/4G speed on T-Mobile was 30 minutes away.

And the hubby and I were two of those new customers. Much happier on TMO than we ever were with Sprint company offerings.

Posted via Android Central App

I and my 5 phones left Sprint for T-Mobile last month. Thus far no real complaints. Is the service as prevalent as Sprint? No, but I am hoping in time it will be. More importantly, unlike Sprint, the LTE works great in downtown NYC where I work so I am no longer paying $50 a month for service that never works.

I used to think T mobile was a joke, I love them now. For the first time in years I have unlimited data. I love the customer service and have had zero problems. When I was with at&t all I had was issues. Never been happier with a carrier