T-Mobile beats Q1 expectations, raises customer growth goals for 2018

T-Mobile CEO John Legere (T-Mobile)
John Legere is the CEO of T-Mobile. (T-Mobile)

T-Mobile’s first-quarter performance largely exceeded analysts’ expectations for the period, with the carrier reporting postpaid net customer additions of fully 1 million—ahead of Wells Fargo estimates of 830,000. Importantly, T-Mobile’s customer additions for the period included 617,000 phone subscribers, a figure that was also ahead of Wells Fargo expectations of 614,000.

Perhaps more importantly, T-Mobile raised its customer growth expectations for all of 2018 to a total of 2.6 million to 3.3 million branded postpaid net customer additions—that’s up from the 2 million to 3 million goal it set in February.

“We added 1.4 million total net customers, extending our winning streak to 20 quarters in a row with more than 1 million total net customer additions,” said T-Mobile CEO John Legere during the operator’s quarterly conference call with analysts, according to a Seeking Alpha transcript of the event. “With 617,000 branded postpaid phone net additions, we are expected to capture 93% of the industry postpaid phone growth including Comcast and 12 times more than Verizon, Comcast and AT&T combined.”

However, Legere acknowledged that a significant portion of T-Mobile’s growth in the quarter came from sales of Apple Watch activations. Analysts questioned whether those customers were worth pursuing.

“Sure, of course. It’s good business. And that’s why we pursue it,” explained T-Mobile’s Mike Sievert. “These are products that come in, $10, $20 family lines sort of ARPU levels. And that’s not a lot different than in smartphone that comes in once you have three or four lines in. So it’s just a nice way for us to continue advancing our business with customers. It’s similar to a SyncUP Drive, which is one of the things that connects cars from us. We are on 700,000-plus units into that initiative. And this is just another way for families to take advantage of their connectivity and extend their relationship with us.”

Overall, Wall Street analysts agreed that T-Mobile remains a top player in the wireless space.

Here are some additional topics covered during the operator’s quarterly conference call:

Merger with Sprint: T-Mobile executives said they are meeting with regulators in Washington, D.C., in order to obtain the necessary approvals to consummate the transaction. And, according to Legere, those efforts are in the early stages: “I would say, my assessment so far is that there is a very good open mind to review all of the aspects of what we feel is an amazing potential opportunity for the country,” Legere said. “Certainly, over the last 48 hours, I have understood that there is a lot of misconception and a lot of conversation, but our story is strong and I’m extremely confident that it will be approved. So we’ll keep you posted there. It’s a beautiful day in D.C., and I look forward to spending many more here and meeting and discussing this incredible opportunity with everyone that will hear me.”

Financials: T-Mobile’s service revenues rose 6.5% year over year to $7.8 billion, and the carrier’s net income declined 4% to $671 million. “Results were better than expected. EBITDA, in particular, beat nicely,” wrote the analysts at Wall Street firm New Street Research in assessing T-Mobile’s financials.

Network: T-Mobile said its LTE network now covers 322 million people, a number that will grow to 325 million people by the end of the year—which the carrier said would help it close the coverage gap with Verizon. On Twitter, CTO Neville Ray added that deployments of T-Mobile’s 600 MHz continue “in earnest,” with 823 cities in 31 states now covered. He said that, between T-Mobile’s 600 MHz and 700 MHz spectrum, the operator “now covers 285M POPs with live low-band spectrum.”