T-Mobile posted more than 2.2 million Q1 net adds, including strong postpaid and prepaid numbers sure to put AT&T and Sprint on notice
T-Mobile US continues to be one of the domestic mobile market’s main growth drivers, posting more than 2.2 million net connection additions to its network during the first three months of the year. The carrier reported robust growth across all of its operating segments, with an exceptionally strong push from its prepaid business.
Postpaid growth topped more than 1 million net connection additions for the quarter, which was just short of the 1.1 million net additions posted last year, though ahead of most analyst estimates. A vast majority of T-Mobile US’ postpaid growth came from “phone” connections, which hit 877,000 net connections for the quarter, while “mobile broadband” connection contributed 164,000 net additions.
On the prepaid side – dominated by the carrier’s MetroPCS brand – T-Mobile US reported 807,000 net connections for the quarter, which handily outpaced the 73,000 net additions posted last year. Overall, T-Mobile US posted more than 1.8 million direct net additions for the quarter, which was its strongest quarter over the past year.
Wholesale growth slid year-over-year to just 373,000 net additions, though was up sequentially and helped push T-Mobile US’ overall Q1 customer growth past the 2.2 million net connection mark. The carrier said it ended the quarter with 65.5 million total connections on its network.
T-Mobile US’ Q1 growth has set a high bar for rivals, with Verizon Wireless so far the only carrier to post results showing 640,000 direct postpaid net additions for the quarter, including the loss of 8,000 “phone” customers. AT&T Mobility is scheduled to post results later today, while Sprint is scheduled to announce its results on May 3.
T-Mobile US posted 1.33% postpaid churn and 3.84% prepaid churn for the first quarter, which were both sequential improvements, though up slightly year-over-year on the postpaid side. Average revenue per user was a mixed bag, with postpaid and prepaid service ARPU dipping slightly to $46.21 and $37.58, respectively, while average postpaid billing per user inched up to $61.90.
The robust customer growth helped push overall revenues to $8.6 billion for the quarter compared to $7.8 billion for the first quarter of 2015. Adjusted earnings before interest, taxes, depreciation and amortization also surged from $1.4 billion last year to $2.7 billion this year, while adjusted EBITDA margins hit 42% in the latest quarter.
Bottom line results also improved, with net income surging from a loss of $63 million last year to a gain of $479 million this year, and adjusted free cash flow improving from a loss of $422 million last year to a loss of $247 million this year.
T-Mobile US said it spent $1.3 billion on capital expenditures in Q1, which was down sequentially from $1.4 billion during the final quarter of 2015, but an increase from the $1 billion spent on capex in Q1 2015. The carrier noted during Q1 it entered agreements to acquire additional A-Block 700 MHz spectrum licenses, pushing its low-band licensed coverage base to 258 million potential customers, while overall LTE coverage stood at 308 million pops including its network partners.
Looking ahead, T-Mobile US adjusted its full-year expectations for postpaid net additions from previous guidance of 2.4 million to 3.4 million net additions to its new guidance of between 3.2 million and 3.6 million net additions; while adjusted EBITDA is now expected to come in between $9.7 billion and $10.2 billion instead of previous guidance of between $9.1 billion and $9.7 billion.
Investors did not seem impressed with the latest results, with T-Mobile US’ stock (TMUS) surging early before dropping off in mid-morning trading.
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