T-Mobile adds 798K postpaid phone subscribers in Q1, posts record-low postpaid churn

T-Mobile CEO John Legere (T-Mobile)
T-Mobile CEO John Legere

T-Mobile continued to roll in the first quarter even as its rivals joined the unlimited-data bandwagon.

The nation’s third-largest mobile network operator added 1.1 million total net subscribers in the first quarter, marking four full years of adding more than 1 million customers each quarter, and it posted $7.3 billion in service revenue, up 11% year over year. Branded postpaid phone churn was a record 1.18%, down 15 basis points year over year and significantly beating analysts’ estimates in the range of 1.26%.

The carrier also increased its guidance range for branded postpaid net additions for the rest of the year to 2.8 million to 3.5 million, up from a range of 2.4 million to 3.4 million. Shares of T-Mobile rose 1.9% Monday afternoon following the earnings report.

“We’ve been beating up on the competition for over four years now while making wireless better for consumers,” CEO John Legere said in a press release. “Q1 was no different with T-Mobile again producing the best customer and financial growth in the industry.”

T-Mobile once again grew its customer base in a big way despite the fact that all four major carriers now offer unlimited data plans. T-Mobile and Sprint were the first to introduce all-you-can-eat 4G data last August, and both AT&T and Verizon have followed suit in recent months.

Here’s a close look at some key first-quarter metrics from T-Mobile:

Subscribers: T-Mobile added 798,000 branded postpaid phone net additions, far outpacing analysts’ estimates in the range of 725,000, although its 386,000 branded prepaid net additions fell short of expectations. The operator said it expects to capture 250% of the growth in the U.S. postpaid phone market during the quarter.

Financials: Total revenues came in at $9.6 billion, up 11% year over year and slightly beating analysts’ estimates, and net income was $698 million, up 46% over the previous year. Adjusted EBITDA was $2.7 billion, down 5%, and free cash flow was $185 million.

Spectrum: T-Mobile bought 31 MHz of spectrum in the FCC’s incentive auction of 600 MHz airwaves that wrapped up last week, quadrupling its low-band holdings. It won 45% of the spectrum sold during the event, and it expects at least 10 MHz covering more than 1 million square miles will be clear in 2017. The carrier once again said it will begin to deploy service on the spectrum later this year, and handsets will come to market in time for the 2017 holiday season.

Summary: T-Mobile’s quarterly earnings are a marked contrast to those of Verizon, which said last week it lost 289,000 postpaid phone customers during the quarter as total consolidated operating revenue fell 7.3% year over year. (AT&T and Sprint have yet to post their first-quarter earnings.) It’s unclear how long T-Mobile can continue its momentum in a wireless market where growth has slowed and every major carrier offers unlimited data, of course. But there’s scant evidence that the No. 3 operator in the U.S. will slow its growth any time soon.