T-Mobile Profit Tops Estimates While Sales, Subscribers Lag

(Bloomberg) -- T-Mobile US Inc. reported profit that beat Wall Street forecasts and raised its estimate for savings from its takeover of Sprint, buoying investors who were also digesting slower-than-expected growth in revenue and subscribers.

Profit for the third quarter came to 55 cents a share, T-Mobile said Tuesday, beating the 51-cent average of analysts’ estimates. Revenue rose to $19.6 billion, missing the $20.1 billion that Wall Street was expecting on average.

The carrier faced stiff competition from rivals, including offers of free phones, that created headwinds for subscriber growth. The promotions by all of the mobile phone companies suggest a fierce holiday fight for new subscribers and phone buyers.

Shares of T-Mobile rose as much as 2.8% to $119.10 in extended trading after the results were announced. The stock is down 14% this year, compared with a 12% decline for AT&T Inc. and an 11% drop for Verizon Communications Inc.

T-Mobile, the No. 2 U.S. wireless company, closed the quarter with 1.3 million new regular monthly subscribers, including 673,000 new phone customers.

Analysts had predicted 1.33 million new subscribers, including 760,000 for phone service. AT&T, which offered free phones to new and existing customers, added 1.2 million subscribers, including 928,000 phone customers.

T-Mobile expects to finish the year with at least 5.1 million postpaid customers and as many as 5.3 million. That’s a slight increase in the bottom range of its forecast. Analysts had been expecting a 5.16 million gain for the year.

The company said about 90% of Sprint’s customer traffic is now carried on its own network, up from about 80% three months ago. T-Mobile expects the benefits of the merger -- a combination of savings and added revenue -- to amount to as much as $3.5 billion this year, an increase of $300 million from its previous projection.

T-Mobile has a lead of one year or more over AT&T and Verizon in midband 5G network expansion, but a return of holiday promotions like $1,000 phone discounts from those rivals threatens to distract consumers from that advantage. Both AT&T and Verizon have started deploying their own midband 5G networks in a race to close the gap.

During the quarter, T-Mobile added 586,000 customers who use tablets and hot spots, and said home internet additions set a record. It’s targeting 500,000 home users by year end. The company launched the $60 a month service in April, which beams fast internet connections into homes. It cut the price to $50 last month. Verizon said it had 150,000 home broadband customers in October.

On a call with investors, executives addressed the data breach announced in August that exposed customers’ personal information, including names, dates of birth, Social Security numbers and driver’s license information.

“Protecting customer data is our top priority,” Chief Executive Officer Mike Sievert said. The company has hired two network security companies and has created a “cyber transformation office” to address vulnerability to hackers, he said.

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