T-Mobile recently released its first quarter earnings report, and the company appears to be experiencing mixed fortunes. Although it posted a loss this past quarter, according to Cnet, it has gained far more new subscribers than any of its competitors.
The company, which has referred to itself as the “Uncarrier,” operates a bit differently than many other major telecommunications companies including paying off new customers’ early termination fees. Its novel approach to the business has certainly awarded the company a glut of subscribers, up 2.4 million in the quarter. Yet, the approach has also forced a continued net loss, down $151 million in the period.
T-Mobile executives do not appear concerned about the current path their company is heading down. This is the second straight quarter that his company has taken a loss, but CFO Braxton Carter is optimistic.
“We’re investing in the future,” Carter said to Cnet. “It’s an investment in the short term.”
This investment, relevant financial data shows, lies in the type of customers T-Mobile is attracting. Company Chief Marketing Officer Mike Sievert commented that it is attracting “high-quality prime customers,” and that sort of remark is not just an expression of Sievert’s opinion.
Out of the 2.4 million new customers, the “Uncarrier” added 1.3 million postpaid customers. These types of customers pay for their mobile services after the fact, according to their monthly data/voice/text usage. The type of relationship that this builds between T-Mobile and its customers is one of trust. Essentially, T-Mobile expects these customers to pay their bills on time at the end of each billing period.
In addition, Cnet reports, 1.26 million of the company’s new subscribers signed up for smartphones. And smartphones hold the bulk of revenue potential because the most expensive phone plans are tied to those types of devices. Furthermore, the addition of 1.26 million smartphone subscribers is significant because those customers are markedly different from users who sign up for tablet-based services.
AT&T reported only approximately 100,000 smartphone subscribers, in comparison, and Verizon and Sprint also showed a loss of similar customers. Verizon and AT&T did post overall subscription gains, but those customers are mostly tied to tablets and other non-smartphone devices.
It is the customer growth, despite the net loss, that drove company receipts up $2 billion in the quarter. Though those receipts were not enough to turn a profit, Ars Technica adds, customers are embracing T-Mobile’s Jump! program which allows them to upgrade their devices up to two times a year at new-contract prices — significantly less than retail. The company is also making headway with its MetroPCS sales and appears to be generating significant revenue even without the addition of MetroPCS.
So, all things considered, T-Mobile has a lot to smile about. It has an overwhelming number of new customers, it believes in the quality of those customers, and it can rely on strong sales numbers in both the T-Mobile and MetroPCS brands. Now it just needs to turn a profit. We’ll see.
Image courtesy of Mike Mozart via Flickr