T-Mobile’s Q4 shows market ‘getting healthier, not sicker’: MoffettNathanson

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

T-Mobile released preliminary fourth-quarter results this morning, confirming that it added more than 5 million net customers for a fourth straight year.

The nation’s third-largest mobile network operator saw 1.1 million net branded postpaid additions during the quarter, 891,000 of which were phone customers. It ended the year 3.6 million branded postpaid net customer additions, hitting the top of the range of 3.3 million to 3.6 million such subscribers.

Branded prepaid net customer additions came in at 149,000, primarily due to growth of the carrier’s MetroPCS brand, and migrations to branded postpaid plans accounted for a reduction of roughly 180,000 prepaid users in the fourth quarter. T-Mobile said its 1.18% postpaid churn was its best fourth quarter for branded postpaid churn ever.

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While T-Mobile’s preliminary results shouldn’t be viewed by investors as proof that the U.S. wireless market has returned to rock-solid stability, MoffettNathanson Research said the early figures indicate the segment is regaining its balance in the wake of failed merger talks between T-Mobile and Sprint.

“This morning’s pre-released results painted an encouraging story of the four player market. The results are broadly in line with our expectations … but that should be seen as good news,” Craig Moffett wrote in a note to investors. “T-Mobile’s continued subscriber growth, in the context of a relatively benign competitive backdrop, is broadly confirmatory of the view that the wireless market is getting healthier, not sicker.”

And while multiple factors led to the demise of a proposed tie-up between the nation’s third- and fourth-largest carriers, a union of the two may eventually occur, he predicted.

“Longer term, we continue to believe we will eventually see another attempt at a Sprint/T-Mobile merger,” he wrote. “When the merger had failed, it boiled down to a matter of the exchange ratio: Sprint’s valuation was simply too high. If, indeed, the exchange ratio continues to correct, then that day might come sooner rather than later. Until then, we continue to like the T-Mobile story either way.”

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