T-Mobile’s Q1 Results Set the Bar High for Competition

by Matt Klassen on April 27, 2016

T-Mobile-fireFor several years now much of the domestic wireless market has stood by and watched T-Mobile spend millions of dollars on its aggressive un-carrier campaign, justifying their lack of response by critiquing T-Mobile’s unsustainable strategy and simply waiting for the other shoe to drop. The only problem, though, is that T-Mobile has repeatedly proved its competitors wrong, posting strong growth across all its divisions and adding new customers at an incredibly consistent rate.

To that end, the country’s third largest wireless carrier announced it has added 2.2 million customers to its network over the first three months of this calendar year, well beyond the 1.7 million the market had expected. As part of that growth, the company added just over a million post paid customers, the most lucrative mobile segment, slightly less than the 1.1 million net additions it posted last year.

Of course given T-Mobile’s sustained success with its revolutionary un-carrier promotions, I would guess it won’t be long until we see the other carriers follow suit, serving as both strong vindication for T-Mobile CEO John Legere, who has taken considerable criticism for his aggressive practices, and as plenty of ammunition for when Legere invariably reminds those competitors of his success.

As the first carrier to post the results for 2016 so far, T-Mobile has certainly set the bar high for its rivals. Verizon, the only other company to post results at the time of writing, only reported 640,000 new additions in the first quarter.

“I can’t think of a better way to start off 2016 than by capturing all of the industry’s postpaid phone growth — again,” said T-Mobile CEO John Legere. “Our model is working and the business momentum is accelerating across the board.”

While dominating the postpaid segment yet again, the company made strong gains on the prepaid side of things as well—a market dominated by T-Mobile’s MetroPCS brand. The carrier reported 807,000 net connections for the quarter, topping the 73,000 additions during the same quarter last year.

As some pie in the face of T-Mobile’s naysayers, the company posted strong financial gains in the first three months of 2016 as well, with net income surging dramatically from a loss of $63 million a year ago to a gain of $479 million this year, and its free cash flow improving from a loss of $422 million in 2015 to a loss of $247 million now.

While the news wasn’t enough to impress investors, I have no doubt it’s enough to put the wireless market on notice, that T-Mobile’s way of doing things is the new way of doing things, and that as unsustainable as it might look, when done right carriers can certainly find a profitable way forward.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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