T-Mobile Continues To Show Customer Gains

T-Mobile latest earnings report for Q4 2013 have revealed that its UnCarrier promotions are continuing to grow the carrier’s customer base. While this is good news in some respects, the report also showed that the promotions are costing the carrier a significant amount of money.

T-Mobile Continues To Show Customer GainsLosses for the quarter reached $20 million, compared to only $8 million for the same quarter in 2012. This is to be expected when considering the types of deals that T-Mobile has been coming out with for its customers, but at the same time, it may prove to be something that investors should worry about.

Even as T-Mobile is reporting losses, it is still doing well in terms of revenue, with a 39 percent increase year-over-year to $6.84 billion. Since the carrier has been adding millions of subscribers, revenue is bound to increase, but T-Mobile has also made numerous financial compromises in order to get those customers to switch from AT&T, Sprint, and Verizon Wireless.

Now that the Uncarrier is continuing to improve its network speeds, more customers may begin to flock towards the carrier simply because of its service. T-Mobile says that its faster 20+20 LTE service will branch out from Dallas, reaching 250 million people by the end of 2014. Along with 20+20, the integration of MetroPCS’ network is around 25 percent complete.

Continuing to rely on expensive marketing tactics to gain subscribers is simply not going to be viable for T-Mobile. However, network improvements combined with the attention that T-Mobile has been receiving since last year may be enough to keep its upward trajectory steady once the marketing dies down.

Recently, the carrier began offering $350 to customers who switch from a competing service provider. This costly offer has already been copied by AT&T which has more money to work with, yet T-Mobile is likely to benefit in a significant way by paying for early termination fees.

T-Mobile is making money on each subscriber they acquire — it’s just nowhere near as much money as the incumbents are used to…The rest of the industry should be very afraid. – Craig Moffett, analyst, MoffettNathanson, speaking with Bloomberg

Setting aside the carrier’s losses, T-Mobile’s abundant success in 2013 is likely to continue through 2014.

Summary: T-Mobile is continuing to grow its customer base and revenues but is also suffering losses as a result of expensive marketing tactics.

Image Credit: atlantablackstar

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