T-Mobile, the third largest U.S. wireless carrier, published its Q1 2017 earnings on Monday, beating market expectations on both earnings and postpaid subscriber growth, amid strong uptake for its new unlimited postpaid wireless plans. Below we provide some of the key takeaways from the carrier’s earnings.
Net Adds Remain Strong Despite Competition
T-Mobile added a net of 798k branded postpaid phone subscribers during the quarter, driven by its One Unlimited plans. The plans appear to be increasingly attractive to subscribers, as T-Mobile began offering all-in pricing that includes all taxes and fees into the advertised price, while also introducing unlimited HD video streaming. The carrier’s strong performance comes despite increased competition, as larger carriers Verizon and AT&T began offering unlimited data options to mainstream subscribers. That said, net postpaid phone adds slowed down by about 9% on a year-over-year basis, due to the lack of iconic device launches during the quarter (Samsung delayed its flagship Galaxy S launch to April this year), a delayed tax refund season and increasing saturation in the U.S. wireless market. While growth could continue to slow in the near term, T-Mobile is likely to maintain its edge over other carriers, driven by its positive brand perception as well as its improving spectrum position, following the 600 MHz incentive auction, in which it emerged the biggest winner. Postpaid ARPU saw a slight improvement on a year-over-year basis, as its One plans are priced higher than the carrier’s legacy entry-level tiered data plans. That said, there was a slight decline on a sequential basis, on account of the introduction of all-in pricing.
T-Mobile added a total of 386k branded prepaid subscribers, driven by its MetroPCS brand and an expanding distribution footprint. However, net adds slowed sharply (down 53%) compared to last year, amid a delayed tax refund season and also due to the de-emphasis of some legacy T-Mobile prepaid products. Prepaid ARPU saw an uptick, rising by around 2.5% year-over-year to around $38.5, driven by a higher mix of MetroPCS subscribers.