August 8, 2013 / 6:05 AM / in 4 years

T-Mobile adds more customers on marketing push

T-Mobile Chief Executive John Legere speaks during a company event in New York July 10, 2013. REUTERS/Brendan McDermid

NEW YORK (Reuters) - T-Mobile US TMUS.N posted a 16 percent decrease in quarterly adjusted EBITDA due to higher promotional expenses, which in turn helped the No. 4 U.S. mobile service provider add more customers.

The company, which is 74 percent owned by Deutsche Telekom AG (DTEGn.DE) and merged with smaller rival MetroPCS in April, was helped by its Apple Inc iPhone (AAPL.O) launch and marketing of a new pricing policy.

T-Mobile US said it added 685,000 contract customers in the quarter compared with the average analyst expectations for subscriber additions of 140,000 taken from four analysts whose estimates ranged from 33,000 to 254,000.

The company recorded total customer net additions of 1.1 million, an improvement of 1.3 million net additions year-over-year.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for the second quarter slid 16 percent to $1.1 billion compared with the same period last year.

On a pro forma combined basis, including MetroPCS, adjusted EBITDA dropped 30 percent year-over-year to $1.3 billion, primarily due to higher promotional spending.

For the full year of 2013, T-Mobile is projecting adjusted EBITDA on a pro forma combined basis, including MetroPCS results for the full year, to be in the range of $5.2 billion to $5.4 billion. Cash capital expenditures are expected to be in the range of $4.2 billion to $4.4 billion on a pro forma combined basis.

Service revenue for the second quarter grew by 8.6 percent helped by the inclusion of MetroPCS results for May and June 2013.

Total revenue rose by 27.5 percent primarily due to the inclusion of MetroPCS results for May and June 2013 and higher equipment sales due to record smartphone sales.

Earlier this year, T-Mobile US eliminated phone subsidies and set up phone installment payment plans for its customers with the idea that they could upgrade their phones more often.

Its bigger rivals AT&T Inc (T.N) and Verizon Wireless have followed suit with announcements of their own version of T-Mobile’s offer of more frequent phone upgrades.

Reporting by Sinead Carew in New York and Sakthi Prasad in Bangalore

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