T-Mobile swings to a profit driven by customer gains

Tue Apr 26, 2016 10:23am EDT
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By Malathi Nayak and Sai Sachin R

(Reuters) - T-Mobile US Inc (TMUS.O: Quote) on Tuesday swung to a profit and raised its 2016 forecast for customer additions, as competitively priced plans and free video streaming options helped it add over 1 million new monthly subscribers for the seventh consecutive quarter.

Shares in T-Mobile were last down 2 percent at $40.32, reversing earlier gains.

T-Mobile has rolled out data-only plans, new family price offers and free music and video streaming services in recent months.

Chief Executive John Legere led the rollout of a series of consumer-friendly offers such as the free video streaming option "Binge On," data rollover plans, and social media campaigns in the past three years. These have helped T-Mobile gain market share, as it is locked in a price war in an oversaturated wireless market with rivals Verizon Communications Inc (VZ.N: Quote) and AT&T Inc (T.N: Quote) and smaller competitor Sprint Corp (S.N: Quote).

T-Mobile, controlled by Deutsche Telekom (DTEGn.DE: Quote), said it added 2.2 million customers on a net basis in the first quarter ended March 31, surpassing the average analyst estimate of 1.72 million, according to research firm FactSet StreetAccount.

The Bellevue, Washington-based company said it now expects to add 3.2 million to 3.6 million postpaid customers on a net basis in 2016, compared with its previous forecast of 2.4 million to 3.4 million. Postpaid customers are those who pay monthly bills for the service.

Churn, or the rate at which subscribers defect to other networks, for postpaid users was 1.33 percent in the quarter, up slightly from 1.3 percent a year ago.

"Churn ticked up slightly, likely on the heels of more aggressive competition from Sprint," New Street Research analyst Jonathan Chaplin said in a research note.   Continued...

People pass by a T-Mobile store in the Brooklyn borough of New York June 4, 2015. REUTERS/Brendan McDermid