July 30, 2015 / 12:29 PM / 3 years ago

UPDATE 2-T-Mobile's revenue beats due to strong customer additions

* Reports Q2 revenue of $8.18 bln vs est $7.94 bln

* Raises 2015 postpaid user addition forecast

* Q2 profit falls 7.7 pct (Adds analyst comment, background; updates shares)

By Lehar Maan

July 30 (Reuters) - T-Mobile US Inc reported a better-than-expected 14 percent jump in quarterly revenue as aggressive pricing helped it win more customers.

Shares of the No.4 U.S. wireless carrier by revenue rose 3.6 percent to $38.37 in early trading on Thursday, after the company raised its full-year postpaid user addition forecast for the second time this year.

T-Mobile said it now expected to add 3.4 million to 3.9 million postpaid users in 2015, up from 3.0 million to 3.5 million.

The company has revamped its pricing plans, eliminated service contracts and launched aggressive marketing campaigns to help turn around years of subscriber losses.

While investors have lauded these efforts, the costs involved have been hurting profits.

But that could start to improve.

“The company’s earnings profile is growing here. They are starting to see some earnings leverage in the model. As EBITDA margins climb, that flows through to earnings,” Macquarie Research analyst Kevin Smithen said.

However, free cash flow fell in the first half of the year, while EBITDA grew, Smithen said, adding that T-Mobile would have to start improving working capital, which took a hit from T-Mobile’s equipment installment plan this quarter.

The plan allows users to pay for new phones or devices on a monthly basis.

T-Mobile reported most of its key user metrics earlier this month.

The company added a net 2.1 million customers in the second quarter, up from 1.5 million a year earlier. It also added 1 million postpaid customers.

T-Mobile, which calls itself the "Un-carrier," said the rate at which users switched to other networks, also known as postpaid churn, fell to 1.3 percent in the quarter from 1.5 percent a year earlier. (t-mo.co/1KAMOuW)

The company’s net income fell to $361 million, or 42 cents per share, in the second quarter ended June 30, from $391 million, or 48 cents per share, a year earlier.

The carrier said it took a charge of $34 million in the second quarter related to the shutdown of its MetroPCS CDMA network and expects additional network decommissioning costs of $350 million-$450 million through 2015.

Revenue rose to $8.18 billion from $7.19 billion, handily beating the average analyst estimate of $7.94 billion, according to Thomson Reuters I/B/E/S. (Reporting by Lehar Maan in Bengaluru; Editing by Kirti Pandey and Simon Jennings)

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