T-Mobile US Inc. (NASDAQ:TMUS) said it added 1.5 million net subscribers in the second quarter, up from 1.1 million a year earlier, as the wireless company continued an aggressive discount campaign aimed at luring customers away from the industry's top two players, Verizon Communications Inc. and AT&T Inc.
T-Mobile, the nation's No. 4 mobile operator, said it now expects it will add 3 million to 3.5 million postpaid subscribers this year, up from 2.8 million to 3.3 million in its previous forecast, a sign that its disruptive "Un-Carrier" initiatives launched last year may be working. In all, T-Mobile now has 50.5 million cellphone customers.
"We have completely reversed T-Mobile's trajectory and started a revolution that is changing the rules in wireless," T-Mobile CEO John Legere said in a statement.
Since launching its "Un-Carrier" strategy in 2013, T-Mobile has eliminated onerous wireless contracts, agreed to reimburse early-termination fees for customers who switch to T-Mobile and most recently announced that consumers could test drive an iPhone 5s for a week.
The Bellevue, Washington, company said it earned $391 million, or 48 cents per share, in the period ended June 30, compared with a loss of $54 million, or 2 cents per share, a year earlier. Revenue rose 15 percent to $7.19 billion. Analysts polled by Thomson Reuters had projected a per-share profit of eight cents and revenue of $7.04 billion.
Out of its overall subscriber gains in the period, T-Mobile US said it added 908,000 postpaid subscribers, which are considered the most lucrative customers in the industry. To compare, Sprint Corp. (NYSE:S) -- the nation's third-largest mobile operator -- said Wednesday it lost 245,000 million postpaid subscribers last quarter, AT&T Corp. (NYSE:T) said last week that it gained more than one million, and Verizon (NYSE:VZ) added 1.4 million.
T-Mobile's new Simple Choice plan, which charges $100 a month for more than twice the high-speed data customers had before, with 10GB, has also proven popular, it said. The pricing option is available through September, with the promotional deal available for both current and new customers.
“We know that this is one of the busiest shopping seasons in the year,” Mike Katz, a T-Mobile vice president of marketing, told CNET last week, “and we expect that this is going to be a really, really popular, powerful option for customers in the market … We have really high expectations for this.”
T-Mobile's continued subscriber growth may heighten the company's appeal to Sprint, which agreed in June to pay about $32 million, or $40 per share, to acquire the company. T-Mobile is majority-owned by Deutsche Telekom AG, of Germany. Japan's Softbank Corp. (TYO:9984) owns Sprint.
The transaction, which is undergoing regulatory review, would combine the third- and fourth- largest U.S. mobile operators. The Justice Department and Federal Communications Commission have each expressed a desire for more network operators capable of competing against market leaders AT&T and Verizon.