T-Mobile Revenue Beats Estimates on More Mobile Subscribers

(Bloomberg) — T-Mobile US Inc. reported new monthly mobile-phone subscribers that exceeded analyst estimates, joining its peers in wooing new customers in the second quarter. The shares jumped 3.3% as the market opened in New York.

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The Bellevue, Washington-based carrier reported a net 777,000 additional monthly phone subscribers, the company said in a statement Wednesday. Analysts were expecting 645,300, according to data compiled by Bloomberg. T-Mobile raised its forecast for mobile subscribers this year to between 5.4 million and 5.7 million, from as much as 5.6 million previously.

Wireless service revenue grew 4% from a year earlier to $16.4 billion, beating analysts’ estimates of $16.3 billion after T-Mobile increased prices on some of its plans for the first time in nearly a decade.

The big three US telecommunications companies are locked in a heated battle to keep customers from switching to rival platforms while also finding new subscribers. T-Mobile said it scooped up more than 300,000 new accounts in the quarter. Verizon Communications Inc., the No. 1 wireless carrier in the US, reported last week that it added 148,000 monthly mobile phone customers in the second quarter, beating estimates. AT&T Inc. also surprised the market with 419,000 subscriber additions.

Chief Financial Officer Peter Osvaldik noted that T-Mobile’s new customers are widespread, from rural areas to top urban markets, and don’t include those people adding a second line.

“These are high quality customers that are flocking to this network and are actually willing to pay for it,” Osvaldik said in an interview.

Some of the new subscribers have come from T-Mobile’s purchase of budget wireless carrier Mint Mobile, which was approved by the Federal Communications Commission earlier this year. Mint has no brick-and-mortar stores and sells phones and mobile plans entirely online. The acquisition, which was announced in March 2023, added 3.5 million customers who use a prepaid phone plan, Osvaldik said.

The pay-as-you-go market is seen as a source of overall subscriber growth, as those often credit-challenged customers eventually move into regular plans billed monthly.

T-Mobile has established a lead among its peers in fast 5G airwaves, adding more rural territories to its coverage area and selling wireless internet access in places where there are limited broadband choices.

The company reported 406,000 new subscribers to its high-speed internet offerings, including fixed wireless and fiber, beating analyst expectations of 400,700. Analysts were skeptical of broadband growth in the second quarter after the Affordable Connectivity Program, which provided low-income households a $30 monthly discount toward home internet service, expired in June.

The company is expanding its broadband portfolio and last week announced a joint venture with KKR & Co. to buy fiber-optic internet service provider Metronet. That followed a deal announced in April for fiber platform Lumos in a joint venture with investment firm EQT AB. Sievert said the company isn’t planning to do more of these deals at the moment.

“Our appetite is somewhat limited for more,” he said on a call with analysts. “We’re not currently working on another transaction like this, and since they’ve been coming every month or two I want to make that clear.”

Total revenue was $19.8 billion, slightly above analysts’ estimates of $19.6 billion. Earnings per share were $2.49, up from $1.86 a share a year ago.

The company also raised its outlook for free cash flow this year to $16.6 billion to $17.0 billion, up from as much as $16.9 billion previously.

Shares rose to $181.17 Wednesday morning, bringing gains for the year to 13%.

(Updates with comments from analyst call and adds shares)