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T-Mobile Tops Subscriber Estimates After Rivals Hit Setbacks

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T-Mobile Tops Subscriber Estimates After Rivals Hit Setbacks
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(Bloomberg) -- T-Mobile US Inc. raised its subscriber growth forecast for the second straight quarter, blowing past inflation-related setbacks that ensnared rivals AT&T Inc. and Verizon Communications Inc.

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T-Mobile now expects to add 6 million to 6.3 million new subscribers this year, up from a prior view of 5.3 million to 5.8 million. The company also led wireless competitors in second-quarter total customer growth, adding 1.7 million regular monthly subscribers, including 723,000 phone customers.

The results show T-Mobile may be gaining ground at the expense of its competitors, especially market leader Verizon. While AT&T and Verizon have recently raised prices by $6 a line on older plans, T-Mobile has focused instead on price promises and new promotions. That’s helped the second-largest US wireless carrier post industry-leading growth without a dramatic dent in free cash flow.

“These trends reflect a very different organic growth picture than peers,” New Street Research analyst Jonathan Chaplin wrote in a note.

For comparison, AT&T added 1.06 million subscribers in the quarter, including 813,000 phone customers. Verizon signed up only 12,000 net new phone customers in the same period. Both companies raised red flags for investors in their earnings reports last week -- the former warning about the high cost of phone giveaways and the latter failing to meet growth targets.

AT&T also cautioned that some of its customers are putting off paying their bills, by about two days on average. On Wednesday, T-Mobile Chief Financial Officer Peter Osvaldik said in an interview that his company is also seeing an uptick in bill-payment delays compared with a year ago. Inflation pressure was apparent in the quarter, he said.

“I’m not seeing anything that gives me great concern. We are still well below prepandemic levels,” Osvaldik said of the bill-payment delays.

Shares of T-Mobile rose 3.7% at 9:45 a.m. New York time. The stock is the best performer among the three big US wireless companies this year with a 15% gain through Tuesday’s close. AT&T had fallen 1.4% and Verizon had dropped more than 13% this year.

T-Mobile raised the low end of its guidance for full-year free cash flow to a range of $7.3 billion to $7.6 billion, up from $7.2 billion to $7.6 billion.

For the second quarter, the Bellevue, Washington-based company reported a 9-cent loss per share, which included merger-related costs and other special expenses amounting to $1.52 a share.

(Updates with analyst comment in fourth paragraph.)

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