Analysts predict another strong quarter for T-Mobile with 1.1 million postpaid adds

T-Mobile

We’re approaching the end of the first quarter of 2015, and if analyst predictions are anything to go by, it may well have been another successful one for T-Mobile. And a lot of this is based on T-Mo’s announcements made during the Uncarrier 9.0 event last week.

During the Uncarrier unveiling, T-Mobile stated a few key numbers. First was that it expects a postpaid churn of just 1.4%. Second was that it expects to capture 26% of the industry’s gross subscriber additions. Third is that expects to take 2 customers for every 1 that it loses to another carrier. Otherwise referred to as a porting ratio of 2:1 in favor of T-Mobile.

With all that information combined, Jeffries’ analysts believe that T-Mobile will add 1.1 million postpaid handset customers in Q1. Jennifer Fritzsche of Wells Fargo estimates 1.03 million, while Credit Suisse’s Joseph Mastrogiovanni believes T-Mobile will announced 1 million postpaid adds.

For reference, T-Mobile added 1.3 million postpaid adds in the final quarter of last year, a record 1.4 million in Q3 and just under 600k in Q2. If it does manage to hit more than 1 million postpaid adds in the first quarter of 2015, it will be the third consecutive quarter to achieve that impressive feat.

Following on with the usual trend, we don’t expect T-Mobile to announced its Q1 financial results until part-way through May, since its executives normally wait close to two months after the quarter closes before releasing the earnings reports.

For me, the big issue is whether or not T-Mobile can continue to make profit. Last quarter was the first time in a long time that the company actually made any profit, despite posting impressive subscriber and revenue growth for several successive financial quarters. If it can build on that progress, and grow further, that’s great news for the company and its shareholders. Particularly Deutsche Telekom, which wants to see the company become far more independent than it has been.

In an ideal situation, DT doesn’t want to have to invest any more money in the company. But rather, see T-Mo making its own profit and managing on its own. If it doesn’t, rumors of companies looking to buy the popular “Uncarrier” will continue for the foreseeable future.

Via: Fierce Wireless

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  • afive720

    Well, I think we will see a strong year of adds by T-Mobile. I think that the ratio of 2:1 is more than realistic given how the last year went, as well as what Uncannier 9.0 has to offer. But, I also share that same concern when it comes to profit.

    DT is obviously not looking to be the investor in T-Mobile, specially given the things the company needs to do in order to gain traction. Yes, network improved ALOT. In fact, in many metro areas it can go head to head with Verizon and ATT. But, it is far from being complete. From hit or miss building penetration, to dead zones in large areas, to non existent service outside the city. Is T-Mobile working on it? Yes, but… Most of the improvements to the network have been done with the cash they received from ATT when the sale failed. DT isn’t going to be investing and they stated that T-Mobile needs upwards of $5B a year in order to stay competitive in the US market. The extremely impressive year they’ve had only netted them $100m. Considering that most of the quarters they still took a loss despite huge adds is alarming.

    What I am curious to see is how they are going to raise needed capital to keep on upgrading, to buy the needed spectrum. Lets face it. Verizon and ATT have way more money to invest which they have been doing, just look at ATT’s LTE improvements over past 6 months and Verizon’s XLTE. To top that, both of those carriers have a TON of spectrum. T-Mobile is kind of in a pickle here as they really can’t invest the money they profit from new adds and their customers as they are racing the market towards the bottom and taking less and less profit per each customer.

    Think about it like this, they now will pay off your installments. I have 3 lines, 2 with iPhone 6+ and a Nexus 6. So, say I go trade in my phones to T-Mobile. They are offering over $450 per iPhone 6+ and $400 for a Nexus 6. Thats $1300 I would get from them AND they will pay my Installments of $650 each. I already am going to be getting over $2000 from T-Mobile just from switching. Given the lower monthly cost, they aren’t making a huge profit off me, and are probably losing money on me on the first year or two.

    On top of that, T-Mobile has gotten a little slower in the city since the years end. It is still fast, but not 40+mbps fast the way it used to be. Another 8m adds and you have to worry about network congestion. Additional $$ needed.

    • Hector Arteaga

      Well, the way I see it is simple. They still managed to pull in a profit last year despite the network expansion. They did manage to do most of the upgrading on the $5 billion they received from ATT, but if they would have had losses, despite savings, wouldn’t have that been reported in the net operating income? To me, it seems as if that was the reason why John Legere was vindicated in his strategy. It can still be protfitable.

      • TK – Indy

        Legere has his financial people structure things to where they have one good quarter per year in the 4th quarter. They will bleed for the first three quarters and have a good last quarter, and everyone will say, “See you can turn a profit doing this.” True, for one quarter of the year, but not nearly enough profit to continue to buy spectrum and invest in the business.

        • Hector Arteaga

          Well, I’m betting that all those additions last year will start showing a profit this year. It seems to me as if they absorb the loss from the promotions upfront and don’t profit from the addition until months later, but who knows.

        • yeah right

          thats exactly the idea. Also they are trying to increase the rate of handset sales by offering $0 down for every phone – to make up for the loss in wireless revenue from being cheaper and more customer oriented.

        • MKashi

          as more and more customers move to T-mobile, the famed download speeds are coming to a crawl. In any medium crowded place like a mall, speeds are terrible from 6-11PM daily. Seems like they are adding more customers, but not doing enough to retain them.

        • Hector Arteaga

          Yet they still lead in download speeds overall. Imagine that. That’s also including the fact that tmobile offers unl and the big two do not.

        • TK – Indy

          Gaah, creative numbers. Verizon is the fastest network. T-mobile advertises “Fastest 4G LTE” because they don’t include their entire network, with all its technologies. That is bunk. Smoke, mirrors, deception. That is Legere’s management style.

        • Hector Arteaga

          Alright. It seems like you just want tmobile to fail at all costs. What’s your angle? What’s it to ya? In any case, what we are both saying is open to interpretation in the end. We will leave it at that.

        • JustSaying

          And what does Sprint advertise? The “No Network”?

        • Stefan Naumowicz

          Their claim of the fastest 4g lte network has been confirmed time and time again by several 3rd parties

        • TK – Indy

          But they can’t say simply “The Fastest Network”, because they don’t have it.

        • klafka

          Except that the last quarter’s profits caused the year to have net profits. Basing whether a company is profitable solely on it’s quarterly profitably is asinine and a major problem with how the current stock system is structured,

    • UMA_Fan

      The trade in value is deducted from whatever you owe in installments. Meaning the pay off of your phones isn’t in addition to the trade in its including.

      The thing with all these Uncarrier moves is that T-Mobile is already number one in the market now in terms of people looking to activate phone service. Tmobile undoubtedly is getting the most of that business.

      So they don’t have to really do a lot of these moves they are still performing better than ever expected.

      These moves aren’t for them to survive and I think they look for funding within the company first to cut to fund moves like this. So for example they may say lets have fewer commercials on prime time tv and we can pay off everyone’s installment plan.

    • dtam

      Tmo had $29.5B in revenues last year, surely the $5B a year is absorbed in there somewhere. Also, they netted $100m (some from spectrum sales) but that was concurrent with them upgrading their network like crazy.

      Who knows where all the numbers are really but it seems like TMO should be ok in the near future

      • Hector Arteaga

        You would also think think that all the new additions from last year, despite promotions, would start making money for tmobile at some point this year.

        • TK – Indy

          The key will be watching the revenue numbers. They have to rise in tandem with the reported rise in connections. If they don’t, something fishy is going on.

        • Hector Arteaga

          Only time I guess. One thing I’m sure of (just from what I remember from the numbers), they aren’t doing as bad as Sprint. So there’s that.

        • TK – Indy

          On connections, yes. Sprint should post a profit this time, as they aren’t writing off 2.4 billion in intangible assets.

        • Hector Arteaga

          We will see. They also borrowed a bunch of money for their network expansion.

        • TK – Indy

          Capital (network improvements) doesn’t show up when you buy it, it shows up in little pieces each year for many years called depreciation.

        • Hector Arteaga

          Right. Just like all the additions don’t show up as profit until later, yet they still managed to post profit last quarter. Must be a reason why analysts seem to agree that tmobile is a buy and Sprint is a sell.

        • TK – Indy

          With the market, who knows. This years gold is next years junk. Profit keeps the doors open in the interim.

        • MKashi

          something fishy is going on, lowering ARPU hence the new metrics like ABPU, ABPA and other abbreviations. T-mobile is using a lot of inventive non-GAAP terms to make things look brighter than they really are, like counting EIP payments as revenue.

        • Guest273

          That’s Legere for ya. He also implemented some very creative accounting methods when he ran Global Crossing. He goes right up to the line and pushes that line strongly to make things look better than it really is, but he doesn’t cross over the line so it’s not illegal. With that said, your comment is absolutely correct.

        • Stefan Naumowicz

          Considering other carriers with contracts have their device cost hidden in with the service cost, counting EIP payments as revenue is required to be able to make an accurate comparison between carriers with different billing proportions.

      • TK – Indy

        Well, they had to borrow almost exactly $5 billion last year. At some point you have to start paying that back, you can’t just add $5 billion in debt each year.

        • dtam

          I only see $1.953B in net added debt in 2014?

        • TK – Indy

          That must mean that they used some of it to pay off existing. There was a $3 billion note offering, plus $2 billion in borrowings from banks.

        • dtam

          Ok, wasn’t sure if I was missing something

      • afive720

        Yes, but how much of it was profited? $100m, not more. And it is expected to have high revenue with so many new adds, although when they offer so many incentives they ultimately take a major financial hit.

        • Stefan Naumowicz

          … They also invested in their network last year (rather heavily). Your making it sound as if the $100 million they posted in profit is supposed to cover the network upgrades

        • afive720

          They did invest heavily in he network and borrowed $5b total. It isn’t like all he new adds they have had paid for between upgrades. Say that $5b didn’t exist and network upgrades didn’t exist. That means that with over 8m new adds after all of the operating costs and promotions they netted 100m. To stay competitive they need this $5b even year. They can’t just borrow it again…

        • Stefan Naumowicz

          I don’t think you realize how much money it costs T-Mobile to acquire a customer, especially with all phones being $0 down and the reimbursement of ETF/EIP payments. 8m new customers is around a 15% growth for them on the year, that costs ALOT of money that has to be absorbed by the revenue stream of the other 85% of their customers. The fact that they were able to make even a nickel of profit in spite of their tremendous costs in customer acquisition is impressive in its own right. Simply put, T-Mobile is struggling to profit because they are growing at such a break neck pace

        • TK – Indy

          I see what you are saying, and you are right. The problem will be hanging on to them until they become a profitable customer. With these companies undercutting each other, if you want the newest phone – just switch and you can get the old one paid off. Phone jumper’s dream.

        • Stefan Naumowicz

          T-Mobile already has managed to reduce their shrink to just 1.6%. With policies in place that make it easy to switch to the newest phone (JUMP, SCORE!) and continuously improving service quality, what makes you think they will have any issue with retaining their customers? The only company whose offers even compare to T-Mobile is sprint, and the vast majority of new T-Mobile customers were previously sprint customers. Its going to take alot more from sprint than covering the cost of switching to them when the people DO NOT WANT the service in the first place.

        • TK – Indy

          Again, it depends on where you are. In many places, Sprint is better, or at least as good.

        • Stefan Naumowicz

          I find that hard to believe. Sprint is quite a bit cheaper than T-Mobile, if it were as good or better in a lot of places people wouldn’t be flocking to T-Mobile and fleeing from sprint.

        • TK – Indy

          In the midwest, this is not happening. A nice new phone is a powerful enticement.

        • Stefan Naumowicz

          I agree, but when you can just as easily get a nice new phone from your current and preferred provider it really kills the enticement to switch

        • afive720

          I do, but think of the cycle. If they keep on trying to expand the same way and enticing new customers while lowering costs, it will always be like this. Their network can only handle so much before new upgrades are needed. T-Mobile used to have a horrible name as far as network quality went, they did a lot to change people’s perception. Now those who switch are pretty happy, and they may end up staying and inviting their friends to switch as well. There are places where T-Mobile has very high capacity to support growth, others it doesn’t. While churn is low, they need to do a lot to keep it low to support the growing user base. Even something like jump, it was changed by T-Mobile to not be as good as it used to be. Thy create offers to reel people in, but then make them less exciting after some time in order to sustain.

          I’m all for T-Mobile and I hope that they can’t start turning a healthy profit and build our their network even further.

        • Stefan Naumowicz

          One huge fact you’re overlooking is the massive upfront costs incurred through huge customer acquisitions will start paying off as those customers become long term revenue streams. Eventually these massive gains coupled with low churn will result in higher profit, it just hasn’t yet because short term costs have remained exceptionally high

        • Melissa

          The other thing you have to look at is this… Even if their pricing is low right now you add more and more customers at that sane price you eventually begin to make a profit. The idea is to reel in enough people so that those deals make them profit and they can gain more capital from having more customers join.

    • Marco

      Didn’t verizon have a debt auction last year as well to buy out the other half of Verizon wireless from Vodafone?

      • afive720

        Yes, to buy itself out of the parent company. That’s indication that they were doing well enough to do that, impressive.

        • Marco

          What I’m getting at is that there is still a huge demand in the credit markets for high yielding corporate bonds. Even Apple had a auction to use it for buy backs for the year. If there is anything to be said its that with interest rates so low right now it’s not such a bad idea to issue debt for say 5 years to get a great ROI in the 600mhz auction.

        • afive720

          I hope you’re right. I am curious to see how much of the 600mhz spectrum they will go after and win compared to ATT and Verizon. As well as how long it’d take for them to implement it into their actual usable coverage.

    • cellularcrazy09

      That’s not how it works. You don’t get trade in AND $650. You will get your trade in and that’s it. You get up to $650 towards your payments due to you trading in your phone not both.

      • afive720

        My mistake. I guess it still may be worth it. Does it have to be the device you’re financing?

        • cellularcrazy09

          I’m pretty sure it does. They will look on your bill when you submit it and the device traded in has to match what it says on your bill or no credit sent.

  • Zach Mauch

    It will be nice to see the passing of Sprint become fully and undeniably official.

    • UMA_Fan

      Ironically does anyone remember it was Philip Humms goal to pass Sprint by 2015?

      I never though that was realistic with the trajectory of Tmobiles customer base back then but here we are.

      • Dion Mac

        I remember that. He also said they would surpass their footprint.

      • gmo8492

        That’s one hell of a prediction.

    • TK – Indy

      They have to pass them in revenue to make the victory a complete one.

      • nat x

        Accessing the business market is key, Sprint makes most of it’s revenue from business customers (wireline). Correct me if I’m wrong.

  • UMA_Fan

    T-Mobile US actually boosted DT’s financial reporting.

    I wouldn’t be surprised if they lent some help with the 600mhz auctions.

  • TK – Indy

    It won’t get much better than this. If DT wants to sell high, they are in that window now and should act before it closes.

    • Mike

      Agreed. The value will only drop as we get closer to the 600 MHz auction amid fear of the amount of money that will be needed to participate.

      • UMA_Fan

        But just like the AWS 3 auction DT doesn’t NEED to shell out money to participate. The low band spectrum is so precious to T-Mobile that they will likely find it worth it to add it to their debt and finance any low band spectrum purchases themselves.

        Especially with the reserve spectrum the government will set aside I think T-Mobile will play this auction hard.

        With Att and Verizon not only are they restricted with how much they can bid but all this auction is going to be about to them is how much is it worth to BLOCK T-Mobile out of low band since they just spent wads of cash on the AWS 3 auction and even though they have deep pockets they can’t throw money around recklessly especially since they have plenty of low band already.

        Verizon and att need more mid band and high band spectrum.

        • Mike

          Dish will be the bad guy in the auction. They will outbid anyone and everyone. The last auction brought in 40 billion. The 10 billion T-Mobile is planning to spend will not be enough. For the restricted portion, Dish will outbid. For the unrestricted portion, AT&T and Verizon will outbid anyone. They have to plan on future needs. Do you think they will just let it go? They will buy it at any cost to keep it out of the hands of Sprint and T-Mobile. With that being said, do you REALLY think they can do this without investment from DT? Doubtful.

        • dtam

          Dish really needs to be banned until they start using up some of the spectrum they’ve been hoarding

        • Mike

          Too bad that will never happen. I believe Dish will likely gobble up T-Mobile or Sprint even if Mr. Son gets tired dumping money into Sprint. At this point, it would be foolish for DT to dump TMUS as it is it’s ONLY growing asset. So let’s see how this ends up. By using Sprint or T-Mobile is how Dish will put that spectrum to use. The has even been rumor it will be leased. Dish has plenty of options at this point. I personally think that T-Mobile should acquire the remains of US Cellular. Their map fits in well where T-Mobile doesn’t have its own coverage. It would add customers and revenue. They would also be able to bid together against Sprint and Dish if Dish takes no action in an acquisition before the auction. They would also gain their spectrum holdings.

        • zombie

          Well theyre are smaller carriers dish would most likely buy anyway. cspire/us cell ect.

        • zombie

          Minus the fact DT could easily invest in the 600mhz and if they ever sold could gain the value of that spectrum right back. Its not like if they buy it , its “worthless” ass it will only add value to Tmobile usa if ever sold or put on the stock market more.

    • UMA_Fan

      Without T-Mobile US, DT’s fiscal reporting last year would have been abysmal.

      They are no rush to sell off T-Mobile US unless an external giant like a cable company or Vodafone swooped in with a giant offer with a major premium on the share price but that’s really true of any company.

      • Mark G

        lol, they finally made a profit and it was only $391 million……t-mobile has been costing DT, thats why they want to sell it off….

        • UMA_Fan

          They would have done that already if that was their primary motive. They would have forbid all these spectrum acquisitions T-Mobile US has been doing this past year. From all the 700mhz and AWS 3 auction they’ve been buying they’ve nearly spent $10 billion.

          Spectrum buys are the biggest indication of a long term commitment to the market.

    • Chris Meyers

      The forum idiot has spoken. All hail the idiot sages prognostication. It wont get much better than this? Maybe you missed the NEXT over 1 million net customer quarter that this article is about. Kinda slow on the uptake there huh? Yeah, when youre growing quarter after quarter and youve just predicted another quarter to pass with the same performance, that aint the peak, thats the middle of the surge. There hasnt been one indication yet of anything to stop tmos growth. Nothing, nada, and thats with 200 messages a post from forum idiots like you during our two years of growth predicting the ened. Theres also the small problem that with tmos spectrum position, there is nowhere but up to go as far as the stocks market cap. It is valued on the very low end for the value of its midband spectrum ALONE
      This aint going nowhere but up long term as a stock.

  • Jay J. Blanco

    If you guys read the report they are predicting Sprint will lose customers in the 1Q 2015 lol quite funny to me

    • Mike

      Sprint is completely down in the Chicago area right now according to ABC 7 Chicago. Not just lte. Lol

      • gmo8492

        So just like every other day.

  • Hayes G. Dubois

    I’m rating T-Mobile stock a Buy and will be calling all my clients to make sure to overweight their portfolio with this stock.

    Any client that objects, or tells me they will “pass”, I’m going to reply, What do you mean, you’re gonna pass? The only people making money passing are NFL quarterbacks and I don’t see a number on their backs.

    • eanfoso

      Don’t forget, people that play the real football ⚽ also make their money by passing and running for more than 10 seconds.

  • Jay Holm

    Hmm. . .60 million customers by the end of the 4th qtr?

  • Mike

    Sprint is getting better in the future believe me you people are getting ripped off on tmobile

    • nat x

      LOL keep telling yourself that. By the time Sprint gets “better” T-Mobile, Verizon, and ATT will be leagues ahead as usual.

    • Jay J. Blanco

      You mean people on Sprint are getting ripped off. must be a typo lol

    • KingCobra

      Yes we know. They’ve been “getting better” and “working on it” for the past 10 years. Network Vision delayed until 2020, etc.

    • Mark G

      well according to the latest root metrics Sprint has gotten much better…….their overall score was better than Tmobile, Tmobile improved as well but not enough to stay ahead of sprint.

  • KingCobra

    Looks like T-Mobile is continuing to roll along. Have to give kudos to all of the network improvements over the past 6 months. Anyone else notice how Verizon has gotten defensive in their advertisements lately? It appears that T-Mobile outpacing them in postpaid growth is getting to them. I can’t wait to see how fierce the competition gets when TMO is at 300M POPs the end of this year.