Commentary

T-Mobile Attracts Customers, Rings Some Bells On Wall Street

For all of T-Mobile USA CEO John Legere’s bluster, he’s delivering. The No. 3 wireless carrier yesterday blew away analysts’ estimates when it said it had gained 1.3 million total net additions in Q2, including 786,000 phone customers on a post-paid plan, with a record-low churn rate of 1.1%. Its $7.4 billion in service revenues, up 8%, is a record-high for the Bellevue, Wash.-based carrier, according to its release.

“Legere said there's no ‘magic’ behind T-Mobile's quarterly results, crediting the beat to investments in the network and ‘good, old-fashioned focus’ from engineers,” writes  CNBC.com’s Anita Balakrishnan. Its stock, which is up 8% this year, rose 3% in after-hours trading.

“This was a competitive quarter. It was the first full quarter with all the unlimited plans on the market,” Legere said during the earnings conference call yesterday. Seeking Alpha has transcribed that call here.

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“The numbers underscore the fact that despite the rival carriers throwing themselves at you for your business, T-Mobile continues to win over new customers,” writes Roger Chang for CNET (before linking to his previous reports of some of those enticements). “T-Mobile, conversely, has been relatively tame and quietly raised the price of its One Plus unlimited plan by $10, matching the price of Verizon's $80 unlimited data plan. 

“The company had said it was open to considering various strategic options and has acknowledged interest in talking with rival Sprint Corp. about a merger. But such discussions appear to be on hold as Sprint explores other partnerships,” write  Reuters’ Anjali Athavaley and Aishwarya Venugopal. “… Sources also told Reuters that Warren Buffett's Berkshire Hathaway Inc. and John Malone's Liberty Media Corp. were exploring an investment of $10 billion to $20 billion in Sprint.”

“I would say we have the same but maybe more opportunities from an inorganic or an expansion standpoint than we had last quarter,” Legere said yesterday, Athavaley and Venugopal report. 

“Legere, in addition to touting his company’s deal potential, also said strong operations mean T-Mobile could succeed on its own,” writes Mark Davis for the Kansas City Star, the hometown newspaper of off-again-for-now potential merger partner, Sprint. “Network investments are bringing coverage to ‘every inch’ of the nation. T-Mobile and its prepaid brand, MetroPCS, each will have added more than 1,000 stores this year, giving the company 17,000 in place for next year,” he continues.

“We could possibly be the fastest-growing retailer in America, I’m not sure,” Legere said during the call, Davis reports.

“The return of flat-rate data plans has freed customers to use more data-hungry apps and to pay less attention to their monthly usage, putting more stress on all carriers’ networks. The new demands could force telecom companies to ramp up their investments just as revenue for the industry is slipping,” observes Drew FitzGerald for the Wall Street Journal.

“T-Mobile made an $8 billion down payment on those network upgrades earlier this year in a federal auction for airwave licenses. The company said it is installing new equipment to take advantage of the newly acquired spectrum, especially in rural areas where T-Mobile has failed to match its peers’ coverage,” FitzGerald continues.

“Regardless of whether T-Mobile merges with Sprint or another party … it needs to work on consumers’ perception that its service isn't great. That means adding new subscribers from here will get more costly, a challenge for a company that already has tighter margins than its bigger rivals — and those bigger rivals are only getting more powerful. AT&T may not be growing, but it will have more enticing offerings once it closes the acquisition of Time Warner Inc. Verizon is also clearly on the hunt to join forces with a big media company,” writes  Bloomberg “Gadfly” columnist Tara LaChapelle.

Earlier in the piece, LaChapelle suggests that after yesterday’s news, “investors should start to see a more mature T-Mobile — even if magenta-t-shirt-wearing CEO John Legere still boisterously nags his starchy rivals in the Twittersphere.”

Indeed, “T-Mobile's John Legere Is Inarguably One Of The More Colorful CEOs On Twitter,” argues this short video compilation by The Street of some of his needling — and attention-grabbing — tweets. 

We suspect the zings will only ripen with age … and success.

 
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