T-Mobile US (NYSE:TMUS) is expected to report strong subscriber growth in the third quarter, according to analysts, and may once again lead U.S. carriers in terms of phone subscriber additions in the period.
T-Mobile, which reports earnings Nov. 5, is expected to post 444,000 net postpaid subscriber additions in its third-quarter, according to the average estimate from seven analysts contacted by Reuters. Some of the analysts said that those estimates may prove too conservative.
AT&T Mobility (NYSE:T) reported 363,000 net subscriber additions in the third quarter, relying on tablets and smartphones to offset feature phone losses. Of the 927,000 net retail postpaid additions Verizon Wireless (NYSE:VZ) had in the third quarter, the company said 481,000 were phones and 370,000 were Internet devices, including tablets.
"I think this is going to be the second consecutive quarter where T-Mobile are the phone net-add champion," Deutsche Bank analyst Brett Feldman told Reuters. He also pointed out that in the second quarter, T-Mobile's branded postpaid churn was 1.58 percent, down from 2.1 percent a year ago, which he said was positive development; he sees third-quarter churn staying low.
"T-Mobile has clearly done something right based on the fact that so many of their customers are choosing to stay with them relative to a year ago," Feldman said.
"This is not a one-time blip," T-Mobile CEO John Legere said on the company's second-quarter earnings conference call in August, when T-Mobile reported 1.1 million customer additions, including 688,000 postpaid additions. "Customers are responding extremely well to the moves we are making."
Since then, T-Mobile has rolled out plans to eliminate international data roaming fees in more than 100 countries, and to offer up to 200 MB of data for free each month to tablet customers who connect its network. However, those offerings have not yet gone into effect and so will not have affected third-quarter earnings.
Moreover, according to one T-Mobile executive, the carrier's "uncarrier" strategy, which it put in place this spring, is also helping T-Mobile increase sales to the enterprise and business segment. "Customers are really very excited about this," said Eric Plam, enterprise sales director for T-Mobile. Plam said that enterprises are generally slower to react to changes in the market than consumers, but that businesses and corporate customers are now reconsidering T-Mobile as their service provider due to the carrier's recent pricing changes.
Further, Plam said that T-Mobile's new international roaming plans are a "blockbuster" with enterprise customers looking to reduce overseas roaming charges.
As evidence of T-Mobile's newfound interest in the enterprise segment, Plam pointed to the carrier's April appointment of Drew Kelton to the newly created role of executive vice president of B2B, reporting to president and CEO John Legere.
Verizon's subscriber growth was below some analysts' expectations--and New Street Research analyst Jonathan Chaplin warned that Verizon's sluggish third quarter results could be attributed to increased competition from T-Mobile. "There were clear signs that a resurgent T-Mobile is impacting even Verizon," wrote New Street's Chaplin last week. "Net adds missed consensus on higher than expected churn. Competition will likely remain intense for the next few quarters and stiffen further as Sprint recovers later in 2014."
Analysts also see T-Mobile going after AT&T's leading position in the U.S. tablet market with its new offer. "T-Mobile is taking market share from everyone," Craig Moffett, an analyst at MoffettNathanson, told Reuters. However, he added that T-Mobile is "specifically targeting AT&T at every turn." He also said T-Mobile's new tablet plan "has to be a concern for AT&T, as tablets are their last bastion of growth."
Despite predictions of T-Mobile's growth, rivals remain unconcerned. After Verizon reported its third-quarter earnings on Oct. 17, Verizon Communications CFO Fran Shammo told Reuters: "I don't feel threatened at all."
- see this Reuters article
AT&T's Stephens: LTE network will fend off competition, but feature phone base is shrinking
Verizon's net adds below expectations, T-Mobile could be to blame
T-Mobile to offer 200 MB of free data for all tablet customers
Analysts: T-Mobile's international roaming targets business users, but may not win them over
T-Mobile kills international data roaming fees
T-Mobile adds 1.1M subs in Q2, promises future disruptions
Mike Dano contributed to this report.