T-Mobile Q2 earnings call takeaway: We don’t need merger to succeed

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By now I’m sure you’ve all read, digested and formed your own opinions on T-Mobile’s Q2 earnings report published this morning. To round it up, T-Mo’s executives went over the highlights in one of its usual live-streamed conference calls.

Among the highlights were:

  • Tablet sales in Q2 were 5 times that of Q1 2014
  • 6.2 million phones sold, 93% were smartphones
  • 80% of postpaid customers are now on Simple Choice plans
  • $7.2 billion in revenue (up 4.5% QoQ)
  • $1.342 billion revenue comes from EIP payments
  • Total revenue growth is up 8% YoY
  • Service revenue growth is 7.1%, making T-Mo the fastest growing carrier. Again.
  • LTE now covers 233 million people in 325 metro cities, by mid-2015 that number will reach 280 million
  • A-block rollout has begun, and the carrier is already testing several devices
  • 1900MHz LTE is also on air
  • Public speed tests show T-Mobile’s network has an average download speed of 19Mbps, that’s faster than any other network by at least 2.5Mbps. More than double Sprint’s average.
  • 17 metro areas are now covered with 15+15 or 20+20 Wideband LTE.
  • MetroPCS conversion from CDMA to T-Mobile’s bands is well underway. Las Vegas and Boston, Hartford CDMA is shut down 2.5 years ahead of schedule.

As always, however, the question and answer session was the most interesting part of the conversation as analysts from various companies attempt to get more information than T-Mo is willing to give. One question was repeated by two separate financial analysts: If T-Mobile’s doing so well, why does it need to merge with Sprint?

As you’d expect, Legere refused to comment specifically on any merger with Sprint. What he did say was quite illuminating. He’s confident that even without a merger, T-Mobile is still the carrier that’s bringing the competition to the market. It’s still going to have a long and bright future if it continues making waves with its Uncarrier movements. That’s not to say that the company couldn’t benefit from short-term success found with consolidation. But he reiterated more than once that the company is looking at multiple opportunities. Sprint, then, isn’t the only option. And success doesn’t depend on becoming the third biggest carrier overnight.

His confidence is based on the mechanics behind how all the Uncarrier moves work. In particular, the offer to pay off other carrier ETFs (launched in January) seemingly has analysts dumb-founded as to how it could possibly turn in to a profitable program. Legere jokingly encouraged the analysts to continue writing reports that perpetuated this myth, to keep his competitors in the dark while he takes all their customers and makes money in the process.

Interestingly, if both T-Mobile and Sprint continue on their current trends, T-Mo could replace Old Yeller as the #3 carrier as soon as next quarter. We’ll keep an eye on that one.

Read more: Q2 2014 results – Subscriber base up to 50.5 million
Read more: VoLTE now nationwide, A-block is active

Another touched-upon topic was the iPhone 6. Legere refused to use the name “iPhone 6″ but, with a recent survey having predicted that 33% of wannabe carrier-switchers would move to T-Mobile, while not many would leave, a new Apple device would give the perfect opportunity. Customers would certainly leave their current providers when it came time to change to the latest, and greatest Apple device (should it arrive), especially if it meant getting it cheaper and having their early termination fees paid.

Like I’ve already mentioned in a previous post, there’s a lot to be pleased with. John Legere is immensely proud of his team. The company has delivered on all fronts. It’s selling more phones, more tablets, gaining subscribers, finally making money and is expanding and modernizing its network at ridiculous speeds. All is well in T-Mo land.

You can listen to a replay of the call by hitting this link. Some of the key slides are in a gallery below:

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  • GameBoi/KillaBit

    The fact that after 7 years, they’re just now putting LTE in my town means they’re serious. It shows that give the people what they want and they will support.

    • monkeybutts

      Well considering LTE launched on T-mobile about 18 months ago that wasn’t a very long wait compared to some people on Sprint.

  • Eric Hare

    It’s very telling that the most ardent supporters of the merger are sprint fanatics. They’re desperate for any kind of positive momentum… nearly everyone I’ve seen with T-Mobile doesn’t want it to happen.

    • Justin Merithew

      I was for it for a while, but seeing Sprint’s continuous downswing I changed my mind. I thought Masa Son would turn things around, but they just keep sinking. Buying a company full of subs that jumped ship from your existing brand with no positive momentum won’t do any good.

      • xmiro

        if the rumors are true Sprint is done for if the merger goes through

  • dtam

    so they earned $391 million last quarter? that’s awesome. where are all of the people saying that net adds didn’t matter because they weren’t profitable?

    • jdubtrey

      Wasn’t that profit due to a spectrum sale? Otherwise, it still would have been a loss, right?

      If that not right, please correct me. I am not sure.

  • Rick Rudge

    This news does look very good. Thank you for sharing it, Cam. Also, with the recent announcement of Apple selling T-Mobile iPhones I’m pretty confident that there will be iPhone 6’s with T-Mobile.

  • ghulamsameer

    “(Should it arrive)”?? Is the release of the iPhone 6 doubtful?

    • Adrayven

      No, but what they will call it is.. There has been speculation that Apple will drop the numbering scene for a little while. I have doubts the next iPad Air will have a number.. Just be called the 2014 iPad Air. like they do with MacBooks.

      At some point, numbering them is just silly… I can see them going iPhone, iPhone Air, iPhone Pro, etc. They already have iPad Mini, iPad Air.. 2nd gen mini never got a number.. Wouldn’t be surprised if the next one didn’t either.

  • KlausWillSeeYouNow

    Cam, what’s this monkey business with redirecting people to a fake Java update or Chrome plugin installation page that is clearly engineered to trick users into thinking it’s a legitimate update prompt? It’s just well-veiled adware, and it’s annoying (not to mention dangerous, as I am highly distrustful of anything that doesn’t show it’s true colors right off the bat). It appears after lingering on a page for a while, and it could only be from TmoNews as this happens cross-device and cross-browser for me. Friends of mine have reported it, too.

    While I’m sure it provides ad revenue, this is NOT the way to do it. It’s extremely deceptive. As it is, this site is getting overrun with ads lately, but at least they can be identified as ads – this is just trickery, plain and simple, and if you ask me, it’s wrong.

    • KijBeta

      What link are you talking about?

      • KlausWillSeeYouNow

        No link. It occurs almost randomly if you let the TmoNews homepage or an article just sit in your browser for a while. I’ve documented the addresses it takes you to, but you don’t get there by clicking on anything – it just takes you after a while.

        • KijBeta

          I get a floating HP ad that pops up after a while, I am on chrome desktop. is it fairly consistent on any platform?
          Phonedog people are responsible for advertising, but if it is deceptive/dangerous they should be able to have the advertising network they use have it removed from the rotation.
          contact Cam with the info and hope phonedog can get it removed.

        • Adrayven

          Not uncommon for malware to infect ads to spread themselves or for them to create ads. Many ad networks don’t scan for it and it gets through until reported. Ad blocker.. love it, live it, use it!

        • redman12

          Ad-block <3

        • Trevnerdio

          Didn’t work for me.

        • KlausWillSeeYouNow

          Definitely cross-platform, happens on my Android, my PC, my tablet, and my work PC. It’s really sketchy.

          I’m hoping Cam picks up on the comment. I know he’s probably not personally responsible for this, but something should be done.

    • KOLIO

      Use GHOSTERY &/or PRIVACY BADGER in CHROME.
      You’ll still have a fully functional browser & able to use what you like (including DISQUS) & filter out the rest.

      • KlausWillSeeYouNow

        I’d prefer for websites to just maintain their integrity, instead. :/

        I have used both in the past, though. Good tools.

        • KOLIO

          I agree,but,unfortunately,the burden is ultimately on the end users to do their due dilligence as best one can beforehand.

          I swore off of C-NET DOWNLOADS for this exact same reason,installed a browser hitchiker that was a PITA to finally get off of my computer.

          The irony was that C-NET had the stones to point out in a recent article how to avoid such w/o naming themselves as being guilty of the same B.S.

    • Stone Cold

      Email phonedog they own the site.

    • Trevnerdio

      Same thing happened to me. I was freaking out, as I had just pulled my mom’s iPad out of the box and it happened right as I connected to WiFi. Ended up resetting my router. I think the DNS settings had been hijacked. Disqus was not working, but all other sites work. Resetting the router worked and I’m not sure if this ad is directly related to Tmonews/Phonedog

  • besweeet

    FYI: The Q&A during the conference call started at 32:10.

  • notyourbusiness

    This is all awesome news. I think we all knew already that T-Mobile doesn’t have to merge with Sprint in order to accomplish any of this. They’re succeeding all on their own and it can only get better from here. Sprint just needs to stay out of the equation.

    • redman12

      And take their $2 billion and continue to upgrade T-Mobile. I like that idea :)

  • Bud

    This executive team has done better than any other company’s executive team in recent history

  • Rish

    Get your signal strength right, if not you will be loosing these millions of customers soon. I am from Pittsburgh, PA.

    • Danny Lewis

      You’re the first to point this out! T-Mo was unaware! /s

    • kalel33

      “losing”, not “loosing”

    • MadJoe

      I was just in the Pittsburg area about a month ago, and you’re absolutely right! The signal outside of downtown is atrocious. We were staying about 45 minutes south of Pittsburg with some family where there is no signal at all, went to the city for a day trip and the whole way up there I was either on EDGE or nothing. It was terrible.
      BTW, the Tilted Kilt has great food, scenery and LTE.

  • http://www.elitecomics.net/ gerry rivers

    Good now only 4 million more customers and tmobile will be the third largest carrier in the u.s

  • TechHog

    At the very least, Sprint and Softbank would be stupid if they even considered replacing the T-Mobile brand. It would be suicide.

  • Trevnerdio

    If only Legere actually said that…those words would be so sweet.

  • jacky

    sprint network blows. haha

  • Cam Fas

    Sprint just needs to loose 2 million before the end of the year and tm can gain two and bingo 3rd place

    • kalel33

      “lose”, not “loose”

      • Cam Fas

        The age of political correctness I apologize for the misspelling but at the time of the quick post I was working on a jet engine. My phone text sometimes are not accurate when busy

        • GetItOn

          You should probably focus on the jet engine more.

        • Cam Fas

          Your right

        • amva55

          Hey Kalel33, you missed it: it shol;d be You’re not Your. Cam excellent article. TMo just need to expand coverage overall. They would be better with an infusion of new capital than a merger with Sprint (Tmo and Sprint kind of have the same coverage territory).

  • james

    If they do merge softbanks ceo said lergie will be the new ceo of company

  • superg05

    whenever T-mobile has an earnings call i always look at what there parent company Deutsche Telekom has to say about i’ll put it here for you all

    “The US business: ”
    T-Mobile US reported a net increase
    of around 2 million branded postpaid customers in 2013. And we are
    still being inundated with customers. In the first quarter of 2014, we
    added 1.3 million own-branded postpaid customers. The strategy of
    T-Mobile US has also been well received, including by the stock market
    last year. The enterprise value rose by 53 percent between April and
    December. The question now is, where does our U.S. business go from
    here? First, we are in a very good position. We have reduced the risks
    for the entire Group. T-Mobile US can now finance itself entirely
    independently and has access to the capital market of its own. The
    growth continues, but we are facing enormous investments in network
    build-out and spectrum. Experts therefore think it would be best in the
    long term if, in addition to AT&T and Verizon, there were a third
    major operator on the U.S. market. That provider would have lower costs,
    better network coverage – and could invest even more. The decisive
    point is the view taken by the U.S. competition authorities. If the
    market were to be streamlined, T-Mobile US would be in an excellent
    position.

    • taron19119

      Where did you get this from

  • Extmo

    I’m i the only one that see that the majority of the tablet sub gains are coming from free add a tablet plans and adding lines to family plans for free. A good chunk of revenue coming from EIP. Money that people owe you? Shady…..

    • Jesse James

      wait.. you are calling EIPs shady? is that a joke?

  • Richard Yarrell

    Tmobile is and will be just fine without Sprint trust that.