T-Mobile Q1 2014 earnings call takeaway: “We won’t stop innovating”

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As you will undoubtedly have read by now, T-Mobile just had its greatest ever quarter. Adding 2.4 million new subscribers to its ranks and selling 6.9 million smartphones. But, having just come off the earnings conference call featuring John Legere, Mike Sievert and Braxton Carter, it’s clear that T-Mo plans on doing even more during 2014.

Net Adds

It’s clear to anyone who can read that T-Mobile had an incredible quarter when it comes to new customers added. At 2.4 million, it’s not only much higher than the competition managed, but also a record for T-Mo and the first time it’s gone over 2 million. In comparison, Verizon’s net adds were 0.55 million, AT&T were 1.06 million while Sprint lost o.55 million. What’s more, 1.3 million of T-Mobile’s were branded postpaid customers, way higher than any of the competition  managed.

Network

It’s been 12 months since T-Mobile’s merger with MetroPCS took place, and it’s well on track with its plans to decommission the old 3G CDMA network and replace it with a much faster GSM one. 53% of MetroPCS’ customers now have T-Mo compatible devices, and more than 50% of the company’s spectrum has been refarmed and integrated in to T-Mobile’s network.

LTE – of course – arose in the call. Magenta’s LTE network has gone from 0 to 220 million POPs in just 12 months. By the end of this year, T-Mo LTE will be available to 250 million Americans. And it’s fast too. 10+10 MHz LTE has now made its way to 43 of the top 50 metro areas. 15+15 has made its way to 9 metro areas, with 19 planned by year’s end. And the good stuff – 20+20 – has gone live in Detroit and North Dallas, with a further 5 markets schedule to receive it by the time 2015 comes around.

We heard yesterday that the deal to bring over Verizon’s 700MHz A-block spectrum was completed ahead of schedule and T-Mo plans on starting deployment towards the end of this year. Once live, it’ll cover 70% of T-Mobile’s current user base, bringing a much better quality LTE network to 158 million Americans. Of course, there are other low-band spectrum auctions planned for this year, and next, and T-Mobile plans on being involved if it can. During the call, Legere announced his gratitude for the regulators’ efforts at making the auctions fair and competitive.

Churn and Porting Ratio

Customers aren’t leaving T-Mobile as fast as they were once upon a time. Churn is down to 1.5%, and customers are spending good money on services, ensuring that T-Mo remains profitable. With so many new subscribers joining Team Magenta, the question arose in the Q&A session at the end as to what the ratio was like in terms of customers leaving from other carriers, and going the other way. To save embarrassment for the other carriers, Legere decided not to reveal specifics on this. He stated that they were high, to the point where it’s not been seen before in the industry. The number joining T-Mo from others compared to those going the other way is very high. On one day it was as high as 17-to-1.

TMUS stock?

I’m no financial expert and so my understanding of the market is limited simply to reading the numbers. Nevertheless, they’re good. Since being made available to the public on the New York Stock Exchange twelve months ago, TMUS stock has risen 88%.

Takeaway

Other carriers have tried to copy some of the moves made by T-Mobile. But they’re usually poor imitations, or limited time offers that don’t really come close to matching Magenta. Uncarrier 4.0, and the offer to pay off ETFs has been hugely successful, and while other carriers only copy it as a short-term limited offer, T-Mobile will always trump its rivals.

With the recent decision to abolish overages, and drop LTE tablets down to Wi-Fi only prices, T-Mobile is going long-term with its version of offering a great service without any of the traditional frustrations involved in mobile contracts.

Legere stated: “We won’t stop innovating and won’t stop advocating for U.S. Consumers” 

While Q1 was an incredible start to the year, it’s not likely that the company will match this quarter again for quite some time. Mike Sievert expressed that the carrier expects that the high subscriber additions rate will slow as time progresses. But that doesn’t mean the company has reached the end of its idea-bank. It will continue to make moves to remove customer pain points, and continue to make T-Mobile a more attractive option to consumers.

I can’t wait to see what’s next. T-Mobile’s proved that it’s got a great strategy in place, and as coverage continues to improve, its reputation and service can only get better.

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  • Anne Droyd

    Yesssss!!!! LOL to all the TMO haters.

  • Stefan Naumowicz

    “customers are spending good money on services, ensuring that T-Mo remains profitable”

    I might be missing something, but a $151 million loss does not make you profitable

    • vrm

      150 million/2.4 million is < $75. I am sure they spent a lot more than $75 to acquire a customer so I suspect that the customer spending offset the cost of acquiring them. That was a one time acquisition cost so going forward those 2.4 million will be adding to the top/bottom line.

      • Stefan Naumowicz

        So a better statement would have been “…setting up tmo for a profitable future.” “Remains profitable” implies they a currently profitable, which they are not.

        • ANTHONY

          Ok DEBBIE DOWNER….whats your point?? everyone knows that 151 million is a loss…there ..its said..so lets move on and give tmo props for their improved outlook and increase in revenue…. and stop being a hater… Let TMO have its success…. They have taken a lot of flack for their network not being the greatest over the years and customers leaving by the thousands..and now that is turning around for them ..adding new customers …increasing network speed and capacity …. so your 151 million loss is noted…MOVE ON TO SOMETHING ELSE

        • Stefan Naumowicz

          All I said was they aren’t profitable at the moment. It was a great quarter, but still no profit. Facts are facts

        • ANTHONY

          no one is disputing your facts….its in Black and White…how could you dispute it?? but your repeated pointing out of that fact…makes it look to me…that you are gloating about it. Apparently it isnt such a big deal for TMO…nor is it for Wall Street as TMOs stock has risen and given that this is the first quarter where they have a loss coming off of quite a few quarters where they have posted profits… it hardly seems that a loss of 151 million is too much to worry about given the changes that tmo has gone through. I would see your insistence on pointing this out if it were quarter after quarter of abysmal results…but its not….so this is why i replied.

          “I might be missing something, but a $151 million loss does not make you profitable”

          P.S. Your statement never made mention that tmo wasn’t “PROFITABLE at the MOMENT”…even that would have sounded better!

        • Don Goyo

          Actually their statement is correct! A company reports a Loss when their liabilities exceeds their assets, the thing is that the liabilities include long-term debt, thats money you dont have to pay in the next couple of years (mortgages, loans, bonds), so in paper it might seem like they have a “loss” because the Financial Statment includes the whole amount (depending on the Statement)

        • xmiro

          no different than what Amazon does. People harp on how it’s not turning a profit what they do in reality is spend the money on warehouses and what not that brings customers and revenue
          If T-Mobile stopped it’s network spending and customer acquisition program tomorrow you’d see “profit” right up front

      • leehorse

        don’t forget to factor in the cost of purchasing spectrum, maintenance of existing equipment, and the new equipment being purchased for the improvements to their network. I would assume these costs are high right now with the way they are rapidly expanding and completing their goals ahead of the planned schedule.

        • vrm

          those are operational costs incurred by ALL carriers, ALL the time. Yes, they have been factored in. In fact, last year this Q, with just over 30 million subs (excl metro pcs), even with a similar level of capex ( a bit less actually), tmobile made a profit !

          Operational costs didn’t go up that much- cost of acquiring subs has gone up but these are one time costs.

        • Edgar

          Yes but the 700mhz spectrum is not operation cost. So if they made that investment and lost 151m plus paying the ETF that is good. My guess is that the second quarter will tell us more about it. Also someone in the other post said that the 1.32 million postpaid additions, only 21% took the ETF offer. So we are talking about 277,000 customers and if I’m not mistaken the math clearly shows that the lost is not from the ETF.

        • tmo_rep

          One of the biggest expenses that people over look are customers calling customer service. especially those repeat callers!

  • Bklynman

    Is that 2.4 million only TMobile,or plus Metro,Brightstar,whatever other little TMobiles there running around.

    • archerian

      including all branded and non-branded offerings, like Metro, GoSmart etc.

    • Cam Bunton

      Yeah, that’s all of them. T-Mobile branded postpaid additions were 1.3 million, I believe. Still more than the other carriers managed in total net additions.

  • archerian

    How many of the 2.4 million are free 200MB tablet users ?

    • John

      In order for a subscriber to get the free 200mb of free data they need to have at least one voice line with tmobile. Did you not know that?

      • archerian

        yeah right, and when the same user adds a free 200MB line, its counted as how many subscribers? Two with one net addition. Btw, you don’t need to be a voice customer for free 200MB data

      • Matt

        Actually they don’t. I bought an iPad with the 200MB of free data without a voice line and am not charged for it.

        • John

          How so when they first started the free 200 mb program they said you need a voice line to get the free 200 mb tablet data so how are you able to get the offer without a voice line?

        • Tmo Rep

          Nope. Matt is right. All that was required to get the 200 MB of free data was a $10 SIM starter kit. After that, it’s free data for life. Nowadays, the only promo that requires a voice line is the 1 GB of free data for 2014 promotion. Or should I say 1.2 GB?

        • Matt

          Yea sorry John not sure what happened if they originally said that but it is definitely free. Also you are only charged for the $10 SIM starter kit if you go to T-Mobile to buy it. I bought it at an Apple store and wasn’t charged for that. Not a huge amount compared to the tablet price I understand but if anyone is interested in that.

        • dm33

          They didn’t say that. You need a voice line to get the free 1GB until 2015.

        • Matt

          to get the free 200mb all you need to do is buy a SIM card and then set it up for prepaid MBB line

      • dm33

        Not true. You don’t need any voice line to get the free 200 MB for a tablet.

    • vrm

      none. Tablet buyers are not considered as subs until they sign on to a data plan. Has been said time and again.

      tablet additions number only about 100k in Q1 and they are all paying customers.

      • archerian

        can you post the link that states they do not count free 200MB users?

        • vrm

          read the earnings transcript esp the Q&A. Or go to Mike Sievert’s twitter account- someone has already asked this Q and he answered it.

  • Dakota

    Did they make a profit?

    • TechHog

      No.

    • xmiro

      they did but invested it in customer acquisitions and the network

    • Fabian Cortez

      Did Sprint make a profit?

  • TechHog

    It’s a lie. Once the merger is annonced, innovation stops and customers leave in droves.

    • http://twitter.com/SParKlngCyaNide SparklingCyanide

      blah blah blah. Come back when you have something constructive to say, as if you can tell the future…

      • TechHog

        It’s the truth. Companies in the process of being bought can’t do things which compete with the buyer. It’s common sense. Even if the merger is blocked, T-Mobile will be set back 6 months or more of progress and will lose 3-5 million subscribers.

        • Justin Merithew

          This is assuming DT is still interested in selling. Now that T-Mo isn’t floundering and is picking up steam, they may want to hold onto their share. Last comment they made on the matter seemed like they were pretty pleased in what John Legere has been doing.

        • TechHog

          Never take corporate execs at face value. DT made similar comments before the AT&T sale attempt.

        • Justin Merithew

          Fair enough, I was pretty anti T-Mo in the pre Legere era, so I didn’t follow the press much when the AT&T stuff was happening. That’s definitely good to know though. I think it’s ridiculous Sprint should even be allowed to try to buy out the company that’s leached away a lot of its customers. People left Sprint for a reason, and will not be happy if they get bought back.

        • UMA_Fan

          Except Tmobile wasn’t booming like it is now.

        • TechHog

          They won’t be profitable for at least another year, probably more, since so much expansion is needed.

        • kalel33

          T-mobile, at the time, was making a lot of money each and every quarter and adding subscribers each and every quarter, until they decided to bring in the German CEO lackey to prep it for sale. They also had the #1 customer service in the industry at the time.

        • UMA_Fan

          Legere has said countless times the Tmobile brand isn’t going anywhere. You think the government would allow it anyway?

          Most of these rumors are started to inflate stock prices. Isn’t it such a CRAZY coincidence this merger rumor came out on the eve of the Q1 results announcements? There’s a lot of wealthy people who have lots of money in stake in the success of tmobiles competitors

        • TechHog

          For the first question you asked, read my last sentence. As for the reset, that’s just a crazy, desperate theory.

        • Tech-Hogs Mom

          You seem to have such a good bead on the company. You obviously a very clueless and haven’t the slightest idea what you are talking about. Business is business, merger or not. Trust me, as someone with inside knowledge, not one presumption you have tried to pass off is fact. It is individuals like you that pass rhetoric for the sole purpose of inflating your and infighting people to believe you have clue. Have a great in high school tomorrow and don’t forget to do your homework or you’ll get groused this weekend.

        • TechHog

          How about actually proving me wrong instead?

    • Cam Bunton

      Yeah, that makes total sense. SoftBank buys T-Mobile because of its competitive edge, and effective Un-carrier strategy, only to wipe them away in favor of Sprint’s methods which aren’t working, and are resulting in hundreds of thousands of customers leaving.. For T-Mobile.

  • Alex Zapata

    I’m waiting for more news about VoLTE, and all that jazz.

  • vrm

    waiting for DT results on May 8th. After 2013Q4 results, they said t-mobile can survive on its own; cannot wait to see what they say in the earnings call.

    • DirkDigg1er

      You really think that DT would want to risk reduction of sale price in such a volatile market. We’ll all see when the money is on the table and Sprint makes a formal bid.

  • daphne34

    dammit just when i was ready to dump verizon cuz i was thinking they wasnt gonna get the xperia z2 and cuz im tired of paying a lot ,i was thinking of getitng tmobile today they showed a leak verizon will be getting the xperia z2 sucks.. i wanted to leave but they getting phone i want ugh dnt know what to do!

    • Pitahson

      it really depends whats more important. The phone or your pockets. Id go with my pockets. Phones come and go fast

      • kalel33

        Current Iphone users on T-mobile would disagree.

    • http://freedomisthedream.com Wesley

      The unlocked GSM version will be sold on Sony’s web site. I’m pretty confident it will work on T-Mobile.

  • wazmo

    Only in the US stock market where a multi hundred-million dollar loss causes the stock to go up. And with SoftBank making noises and Sprint a basket-case with whacked out bandwidth, the next two quarters will tell if this will be a win. Somehow I don’t see the FCC being all too kind on a SoftBbank acquisition, financing or no. Maybe the SoftBank noise is what will cause Charle Ergen to crawl out of the woodwork and bid for TMUS.

    • DirkDigg1er

      Charlie Ergen already said that he didn’t want to bid against Softbank again. I doubt that he would change his mind now. I also think Masa Son and co. are really good at acquisitions. These are similar issues they faced in the Sprint/Clearwire deal. He is offering DT more premium per stock to lowering the breakup fee.

    • bob90210

      If you don’t understand why the stock price goes up when a company posts losses, then you should not pay attention to the stock market at all.

    • TechHog

      Do you really not understand why it went up?

  • Guest

    Though I’m happy for T-Mobile. I’m not so happy about this ad that is covering the box I’m typing in. Not only is it blocking what I’m typing from my view, it doesn’t have a way to close it and it is a Sprint ad, telling me to switch to Sprint.

    • Guest

      Restarting Chrome fixed it. I really hope T-Mobile can keep growing :)

    • josephsinger

      tmonews must be desperate for money. I can’t see any other reason for putting multiple annoying ads in one view. They’re getting almost as annoying as YouTube.

    • Cam Bunton

      Please help us out be sending us screenshots. I’m not seeing these ads covering the comments, at least I haven’t for a while. If we can fix it, we will.

  • ObnoxiousAds

    The ads on this site are laughable, I’ve been to porn sites with less pop up blinking lights. Using it on my phone is almost impossible.

    • Jay Holm

      I go to this site exclusively on my phone, I use the Opera browser when browsing this site, and I’m able to X out the ads just fine.

  • Bud

    I wonder what dt, has to say about the success of t-mobile usa.

  • Laststop311

    Download the chrome extension adblock. I forgot what ads even llok like I haven’t seen one in such a long time.

  • Jay Holm

    I hope innovation means not just Wideband LTE, but carrier aggregation for even faster speeds!

  • Jay Holm

    The kind of innovation that I would like to see is not just Wideband LTE but also carrier aggregation, faster speeds!

  • Paul

    Looks like Big Red is starting to throw it’s tantrum over the auction rules.

    • Cam Bunton

      Ha. I saw that..

  • KPR

    T-Mobile needs to take care of its loyal customers who stayed with them in all turmoils.
    Right now, there are getting lip service