T-Mobile is hitting on all cylinders in a wireless market that is getting more competitive by the month. Shares are up on the news that the company beat its fourth-quarter revenue and earnings expectations and turned a profit.
Revenue in the three months ended in December rose 19 percent, year-over-year, hitting $ 8.15 billion. Total revenues are up 13 percent year-over-year.
The company added 2.1 million customers, which brought its subscriber count to just over 55 million. That marks the seventh quarter in a row T-Mobile has generated over 1 million net customer additions. For the full-year 2014, T-Mobile added 8.3 million net customers, an 89 percent increase from the prior year.
“2014 was the best year of growth in company history,” said John Legere, president and CEO of T-Mobile. “Our Un-Carrier moves helped us blow away the competition. The best is yet to come, as the future looks bright in 2015.”
Can T-Mobile Do It Again?
We caught up with Jeff Kagan, an independent technology analyst, to get his thoughts on the earnings and where T-Mobile goes from here. He told us that T-Mobile keeps hitting the ball out of the park but isn’t sure the company can keep it up.
“The entire wireless industry is changing and becoming more focused on lower prices,” Kagan said. “AT&T Mobility has been aggressively lowering prices and still providing a much better network experience.”
Will this will slow T-Mobile growth? If not, will Verizon’s entrance into the lower-priced revolution stymie T-Mobile’s winning streak? What about Sprint’s moves and vastly improved network? Sprint is also competing more heavily in the lower-priced space. How will that impact T-Mobile? The question of ongoing growth, Kagan said, is a nagging one.
How Will T-Mobile Respond?
“Even executives from parent company Deutsche Telekom AG are asking this same question,” Kagan said. “We’ll just have to wait and see what happens in the wireless industry over the course of the next few years for a longer-term answer.”
If T-Mobile does not keep growing, how will the company respond? That’s the next question. Kagan pondered whether customers would still choose T-Mobile if all Sprint, Verizon and AT&T reach pricing parity.
“To date, customers have chosen T-Mobile for lower price,” Kagan said. “However, as all competitors enter that same space the question is, why will customers continue to choose T-Mobile? I want T-Mobile to continue to be successful. Understanding how, longer term, is a challenging question.”
Moving Ahead
Consistent with industry trends, T-Mobile’s customers continued to migrate to smartphones. Total smartphone sales, including sales to branded postpaid and prepaid customers, were a record 8 million units in the fourth quarter of 2014, or 93 percent of all phone units sold.
T-Mobile’s 4G LTE network covered 265 million people at the end of 2014, exceeding the original year-end target of 250 million. The company is targeting coverage of 300 million people by year-end 2015, and is rapidly deploying Wideband LTE while rolling out 4G LTE on its 700 MHz A-Block and 1900 MHz PCS spectrum.
At the end of 2014, Wideband LTE, which provides more bandwidth for faster data speeds, was available in 121 market areas. The goal is to expand the service to more than 150 market areas by the end of 2015.
