T-Mobile US Posts Big Subscriber Gain

24/7 Wall St.

T-Mobile US Inc. (TMUS) reported third-quarter 2013 results before markets opened Tuesday morning. The wireless carrier posted revenues of $6.69 billion, compared with revenues of $6.15 billion in third quarter of 2012. Adjusted EBITDA fell from $1.69 billion to $1.34 billion. T-Mobile reported results on a pro forma basis to include the MetroPCS acquisition.

T-Mobile began selling the iPhone 5S and 5C from Apple Inc. (AAPL) on September 20, and although the company did not provide a break-out of iPhone sales, T-Mobile did say it sold 5.6 million smartphones in the third quarter, which includes sales to prepaid branded customers. Smartphone sales accounted for 88% of phone sales in the quarter.

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The company reported that it ended the third quarter with more than 45 million customers. T-Mobile added a net 672,000 subscribers in the third quarter, leaving the company in fourth place, based on subscriber numbers, but gaining on Sprint Corp. (NYSE: S). Sprint reported a subscriber total of 54.88 million at the end of third quarter, down from 55.96 million at the end of the 2012 third quarter. Wireless giants Verizon Communications Inc. (VZ) with 101.2 million subscribers and AT&T Inc. (NYSE: T) with 109.5 million remain well ahead in total wireless subscriber counts, T-Mobile's new subscriber numbers look damned good. Sequentially, AT&T added 363,000 subscribers in the third quarter and Verizon added 927,000.

The company's CEO said:

T-Mobile’s Un-carrier approach is resonating with consumers. We added more than 1 million customers and led the industry with 643,000 branded postpaid phone additions because we are fixing the things that drive customers crazy.

A key metric for the new T-Mobile US is its average revenue per user (ARPU). For its branded postpaid customers, ARPU slipped sequentially from $53.60 to $52.20 a month. Branded prepaid ARPU also slipped sequentially, from $35.97 to $35.71.

Rapid adoption of T-Mobile's lower-cost plans is the reason for the drop in ARPU. The company said this is being offset to some extent by increased spending on high-speed data plans.

The consensus estimates for the fourth quarter call for revenues of $6.73 billion. For the full year, the revenue forecast calls for $25.66 billion.

T-Mobile shares were trading down about 4% Tuesday morning at $27.19, after posting a new 52-week high of $29.48. The 52-week low is $16.01. The consensus target price for the shares was around $27.20 before this report.

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