T-Mobile's initiatives to break wireless industry conventions seem to be working.
T-Mobile’s initiatives to break wireless industry conventions seem to be working.
The No. 4 wireless company said Tuesday that it added 643,000 long-term, good-credit phone customers in the latest quarter. It’s the second straight quarter of increase after years of losses.
The growth comes as T-Mobile introduced new pricing plans, the ability to upgrade phones more frequently and free data and texting services in more than 100 countries.
T-Mobile is also boosting its subscriber growth prediction for the full year. T-Mobile says it now expects to add a net 1.6 million to 1.8 million of the good-credit customers this year, up from its previous prediction of 1 million to 1.2 million.
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Shares of T-Mobile, which is under the control of Germany’s Deutsche Telekom AG, initially rose as much as 4 percent after the results came out, but they fell 1.9 percent to $27.81 in afternoon trading.
One concern: Much of the gains came from new plans with lower service fees. For the core plans, average revenue per subscriber was $52.20, down from $56.59 a year ago. T-Mobile expects that to stabilize late next year.
In the quarter, T-Mobile lost $36 million, down from a loss of $7.7 billion a year earlier, when the company took a charge for the declining value of some assets. Revenue grew 37 percent to $6.7 billion, largely because of the absorption of MetroPCS customers from a merger this year. T-Mobile also benefited from higher smartphone sales.
Overall, T-Mobile added 1 million customers in the third quarter to end with 45 million. Besides the 643,000 good-credit phone customers, T-Mobile added 5,000 of such customers for non-phone devices, namely tablets.
That left it with 21.4 million of such customers. These so-called post-paid customers are more lucrative and stable for wireless carriers. Elsewhere in the wireless industry, these are known as contract customers, but T-Mobile ended traditional two-year contract requirements when it introduced new pricing plans in March.
In July, T-Mobile introduced its Jump program offering insurance and the ability to upgrade phones up to twice a year for $10 a month. The company said Tuesday that it had 2.2 million Jump subscribers, roughly in line with its expectations. Although that means the company will have to fulfill upgrade orders as early as January, CEO John Legere said the program assures customer loyalty without contracts.
“We’re anxiously awaiting giving people these benefits,” Legere said in an interview. “They are recommitting to us.”
T-Mobile’s plan to offer free data and text abroad was announced after the quarter ended, but marketing chief Mike Sievert said the program has already drawn many business customers, which hasn’t been a strong area for the company. Also coming after the quarter ended was a pledge to give tablet users a limited amount of free data each month.
T-Mobile also added 24,000 so-called prepaid customers — those who are on limited-use plans or who pay for monthly service in advance. It’s less than the 365,000 increase a year earlier, a figure that excludes MetroPCS customers. T-Mobile says many of those pre-paid customers simply moved to the core plans.
The remaining gains came from wholesale customers, which include services for machines talking to machines.
AP Technology Bree Fowler contributed to this report.