T-Mobile US quest for customer growth looks to be taking a toll financially as the nation’s scrappiest carrier saw its net losses widen year-over-year during the fourth quarter.
The carrier reported a loss of $20 million during the final three months of 2013, an increase from the $8 million loss posted in 2014. However, for the full year, T-Mobile US posted a $35 million return, which was a dramatic turnaround from the $7.3 billion loss posted in 2012. It should be noted that 2012 results were impacted by a one-time charge during the third quarter of that year.
A larger impact from T-Mobile US’ aggressive marketing tactics could be felt when first quarter results are announced as the carrier earlier this year rolled out an offer to pay up to $650 per line for customers switching from a rival to T-Mobile US.
Total revenues grew by almost $2 billion year-over-year during the fourth quarter, surging from $4.9 billion in 2012 to $6.8 billion in 2013. T-Mobile US noted that the inclusion of MetroPCS’ operations accounted for a majority of the change. Full-year revenues witnessed a similar increase, growing from $19.7 billion in 2012 to $24.4 billion in 2013.
The inclusion of MetroPCS’ operations also impacted average revenue per user, with T-Mobile US’ branded prepaid ARPU jumping $8.16 year-over-year during the fourth quarter to $35.84. Branded postpaid ARPU dropped $4.77 connected to the rollout of its Simple Choice rate plans in early 2013.
Capital expenditures during the fourth quarter dipped slightly from $898 million in 2012 to $882 million in 2013, with full-year capex increasing by one-third to $4 billion in 2013. T-Mobile US’ aggressive LTE rollout hit its stride in 2013 as the carrier pushed coverage past 200 million potential customers by the end of the year. The carrier expects to spend up to $4.6 billion on capex in 2014, with plans to expand LTE coverage to 250 million pops and begin integrating 700 MHz spectrum acquired earlier this year from Verizon Wireless.
T-Mobile US noted that it was on track to shut down three MetroPCS markets in 2014, with those operations being moved over to the T-Mobile US network. That shut down will require the migration of MetroPCS customers with legacy CDMA devices. T-Mobile US added that more than 25% of MetroPCS’ spectrum holdings had been re-farmed in support of T-Mobile US’ services.
T-Mobile US had previously announced some operating metrics for the fourth quarter, including 1.6 million net customer additions, which was a substantial turnaround from the 32,000 customers it lost during the fourth quarter of 2012 as well as over-powering the approximately one million net additions posted during the third quarter of last year. T-Mobile US’ Q4 growth included 869,000 branded postpaid net additions, with traditional phones accounting for 800,000 net adds and other devices making up the remainder.
T-Mobile US’ fourth quarter growth trailed only Verizon Wireless, which posted 1.65 million net new connections on its network during the quarter; nearly doubled the 809,000 net customer additions posted by bitter-rival AT&T Mobility; and more than tripled the 477,000 net connections added by Sprint.
For the full year, T-Mobile US managed to add nearly 4.4 million net connections to its network, compared with just 203,000 net connection additions in 2012. Looking forward, T-Mobile US’ management said it expects branded postpaid net additions to at least meet the two million added in 2013, with a range for 2014 of up to three million branded postpaid net additions.
T-Mobile US also reported mixed customer churn results, with branded postpaid churn dropping from 2.5% to 1.7% year-over-year, though remaining stable sequentially. Branded prepaid churn actually inched up slightly year-over-year from 4.9% to 5.1% and sequentially from 5% during the third quarter.
Investors seemed cautious on T-Mobile US’ news, with the carrier’s stock (TMUS) trading down slightly early Tuesday.
Bored? Why not follow me on Twitter?
