T-Mobile notches 1.6M new subs in Q4, will shutter 3 MetroPCS CDMA markets this year

T-Mobile US (NYSE:TMUS) reported adding another 1.6 million new customers in the fourth quarter of 2013, and used its end-of-2013 results to trumpet the progress of its "uncarrier" initiatives, which it launched at the beginning of last year. Specifically, T-Mobile said it was able to garner 2 million branded postpaid net adds in 2013, ahead of its guidance of 1.6 million to 1.8 million, and that it earned 2013 adjusted EBITDA of $5.3 billion, directly in line with its previous guidance range of $5.2 billion to $5.4 billion.

Importantly, T-Mobile predicted the good times will continue: For the full year 2014, T-Mobile said it expects to garner an additional 2 million to 3 million new customers and will grow its annual adjusted EBITDA to between $5.7 billion to $6 billion.

"2013 was a transformational year for us," CEO John Legere said, adding that the carrier was able to "deliver growth in a fiscally responsible way." Legere also said that "we expect that the pace of growth will continue even further in 2014."

T-Mobile also offered some insights into its efforts to integrate MetroPCS' business, a CDMA prepaid carrier it acquired last year. Specifically, T-Mobile said that it has managed to move 3.5 million Metro customers, or around 40 percent of Metro's total customer base, off that carrier's aging CDMA network and onto T-Mobile's GSM-based network. T-Mobile said that 25 percent of Metro's spectrum has now been refarmed into the T-Mobile network. T-Mobile said this migration is happening faster than it had anticipated.

As a result, T-Mobile said that it will shut down MetroPCS' CDMA networks in Philadelphia, Las Vegas and Boston by the end of this year, a year earlier than expected. "That will yield significant cost savings in the future," Legere said, adding that the carrier will incur one-time charges related to the shutdown.

T-Mobile also said that its most recent uncarrier move--to pay up to $650 in early termination fees to smartphone customers who agree to switch over to T-Mobile's network--has paid off. The carrier said the offer has motivated a significant number of customers to switch to T-Mobile, mainly from AT&T. Legere said that fully two-thirds of those customers taking advantage of the offer are "prime" customers with good credit. He said that T-Mobile is generally paying $200 or less in ETFs per customer.

However, T-Mobile reported a widening loss of $20 million for the quarter, partially due to its efforts to add new customers.

As for T-Mobile's LTE network buildout, the carrier increased its 2014 LTE coverage target from 225 million people to 250 million people. The carrier also said that it now offers 20x20 MHz LTE in Dallas, where average download speeds are now reaching 20-30 Mbps.

T-Mobile's successes in the market have sparked a number of pricing changes by rivals, including from market leaders AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ). However, T-Mobile's Legere declined to phrase those actions as the start of a wireless price war.

"It is a highly competitive environment," Legere said, adding that "we have a great deal of respect for the competitive environment." He said that "I think it's normal, healthy competition" and that "I don't feel it is a price war and I don't think it will become a price war."

Legere also reiterated his stance on potential industry consolidation--comments notable in light of rumors that Sprint (NYSE:S) and parent SoftBank have been considering a bid to merge T-Mobile with Sprint. "This industry is ripe for further consolation," Legere said, explaining that such consolidation would create viable competition to AT&T and Verizon. But he declined to comment on specific possible transactions.

Here is a breakdown of T-Mobile's fourth-quarter results:

Subscribers: T-Mobile notched 981,000 total branded net customer additions in the fourth quarter, including branded postpaid phone net additions of 800,000 and 69,000 mobile broadband net additions, alongside 112,000 T-Mobile branded prepaid net customer additions. The carrier added 492,000 customers from its MVNOs, which include Solavei, Ultra Mobile and others, as well as 172,000 M2M customers.

Smartphones: T-Mobile said it sold a record 6.2 million smartphones in the fourth quarter, around 91 percent of all phones sold.

Churn: T-Mobile's branded postpaid churn rate dropped to around 1.7 percent in the fourth quarter of 2013, flat versus the third quarter of 2013 and an improvement from the 2.5 percent it notched in the fourth quarter of 2012.

ARPU: T-Mobile said its branded postpaid average revenue per user decreased quarter-over-quarter by $1.50 to $50.70, which the carrier attributed to customers moving to its cheaper Value and Simple Choice plans. However, T-Mobile predicted its ARPUs would stabilize in the second half of 2014.

Financials: T-Mobile's revenues in the fourth quarter increased by 39.1 percent year-over-year, principally due to the inclusion of MetroPCS results in the fourth quarter of 2013.

For more:
- see this Reuters article
- see this release

Special Report: Wireless in the fourth quarter of 2013

Related Articles:
Sprint challenges T-Mobile with its own Wi-Fi calling service, launching first on Samsung Galaxy Mega, S4 mini
T-Mobile's LTE network the nation's fastest at 11.5 Mbps, according to report
T-Mobile aims to cut roaming costs in M2M market with new eSIM
BlackBerry CEO Chen slams T-Mobile for enticing BB users to switch to iPhone