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T-Mobile’s New Customers Pressuring Its Profits

April 29, 2015 Industry News, T-mobile
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In its latest quarterly briefing, T-Mobile announced it yet again had total net subscriber additions of more than 1 million. But the carrier’s new customer acquisitions are impacting the company’s profit margin.

t-mobile profitsThough the carrier missed its first-quarter earnings per share (EPS) by just a penny, it marked down a loss per share of .09 for the first quarter of 2015 compared with its .19 mark down a year ago. But the carrier earned customers in droves. During the first quarter of 2015, T-Mobile reported adding 1.8 million customers. The first quarter of 2015 marks the eighth consecutive quarter in which T-Mobile reported additions of over 1 million. T-Mobile expects EPS for the remaining three quarters of 2015 to be positive.

T-Mobile is attracting new customers with a variety of promotions, including its recently announced data rollover program. Known as Data Stash, the program allows customers to retain their unused monthly data for up to a year. This and other promotions have brought in new customers but also put pressure on T-Mobile’s Average Revenue Per User (ARPU), which saw a sequential decrease of 3.8 percent to $46.43. T-Mobile notes that branded postpaid phone ARPU for Q1 declined by 1.2 percent sequentially, and 5.5 percent year-over-year.

Its promotions are also helping to retain customers. During Q1, T-Mobile saw subscriber churn at a company low of 1.3 percent. Company CEO John Legere said the carrier’s low churn is ahead of its own expectations, which anticipated churn of 1.6 percent by 2017 thanks to T-Mobile’s Un-Carrier and Data Stash promotions.

Aside from promotions, T-Mobile is working to invest in its network and has its eye set on becoming the nation’s third-largest carrier by year’s end. At the end of Q1, T-Mobile had 275 million 4G LTE POPs, and hopes to have 300 million by the end of the year. The carrier currently has 157 markets with its Wideband LTE, a figure T-Mobile hopes to increase to its target of 200 market areas by year’s end. T-Mobile reports it already has a 700 MHz A-block spectrum in 55 market areas.

And the good news seems to continue for T-Mobile. In recent the FCC auctions, T-Mobile paid $1.4 billion for AWS-3 spectrum licenses, which cover nearly 100 million people. The carrier was awarded the licenses early in the second quarter of this year. T-Mobile also had a good quarter for revenue. The carrier beat industry predictions for its revenue, earning $7.8 billion, an annual increase of 13 percent.