The third quarter was all about growth for T-Mobile US Inc. The carrier saw significant customer acquisitions and is now neck-and-neck with Sprint Corp. in terms of total subscribers.
T-Mobile added 2.3 million customers during the third quarter, which includes 1.4 million contract subscribers and 411,000 prepaid customers. The company reported its best quarter in terms of growth, with its phone gross additions up 46 percent year-over-year. Overall, T-Mobile now has 52.9 million customers, putting it just behind Sprint, which had 53 million customers as of the second quarter.
Notably, in August, T-Mobile CEO John Legere vowed to overtake Sprint in terms of customers by year-end. Sprint won’t announce its third-quarter earnings until next Monday, but the carrier has been losing customers steadily for several quarters.
“Despite our competitors’ best efforts, the Un-carrier revolution made huge advances in the third quarter with record net new customers,” Legere said. “More proof of the resurgent strength of our brand and the massive momentum behind the Un-carrier consumer movement.”
T-Mobile expects a strong finish for 2014, with total projections between 4.3 million and 4.7 million customers added during the year, up from previous estimates of 3 million to 3.5 million.
But all its effort in acquiring customers has translated into significant losses for T-Mobile. The Bellevue, Washington-based company posted a quarterly loss of $94 million, or 12 cents per share. Revenue rose 10 percent to $7.35 billion. Analysts polled by Thomson Reuters were expecting earnings of 3 cents per share on revenue of $7.44 billion.
During the third quarter, T-Mobile launched its Uncarrier 7.0 initiative, which allows customers to use Wi-Fi voice calling and texting, in addition to in-flight texting. T-Mobile launched its Uncarrier service in March 2013, when it restructured its business model to an equipment installment plan. Since then the carrier has announced such programs as Contract Freedom, which reimburses Early Termination Fees for customers switching to T-Mobile from another carrier.
Other recent programs include Test Drive, which allows users to try T-Mobile’s service on an iPhone for one week and Music Freedom, which provides free streaming for music applications. While such programs have been popular with subscribers, T-Mobile’s lack of profit shows that its efforts to be popular have been taxing on its bottom line.
Like many other networks, T-Mobile has seen significant demand for the iPhone 6 and 6 Plus. Legere said the devices’ launch was the biggest ever for the carrier, with iPhone now accounting for 20 percent of T-Mobile’s smartphone base. The iPhone 6 Plus has especially been popular on T-Mobile.
“We’re in that quarter where we’ve got backlogged customers; especially the 6 Plus was mind-blowing," Legere said. “The distributions between the 6s and 6 Plus’ were very skewed in a different way than we thought.”
The CEO added that while T-Mobile is beginning to catch up with backlogs for the iPhone 6, the iPhone 6 Plus may be back ordered for some time. He indicated that the ratio between the iPhone 6 and iPhone 6 Plus has been about 55-45.