Record T-Mobile Subscriber Growth Offsets Earnings Miss

Telecom & Wireless

Published: October 28, 2014 10:10 am

Last Updated: October 28, 2014 10:12 am

T-Mobile US Inc. (NYSE: TMUS) reported its third-quarter results after the market close on Monday as -$0.12 in earnings per share and $7.35 billion in revenue. That was against consensus estimates of $0.02 in earnings per share and $7.42 billion in revenue. Thomson Reuters reported the previous year’s third-quarter earnings as -$0.03 per share on $6.69 billion in revenue.

The company’s guidance for the full year sees 4.3 million to 4.7 million post-paid net additions, which is up from the previous guidance of 3.0 million to 3.5 million. The previous guidance for EBITDA and capital expenditures remained unchanged.

T-Mobile reported a net loss of $94 million for the third quarter, compared to the net loss of $36 million in same period of the previous year.

Service revenues for the third quarter were $5.684 billion, up 10.6% from the previous year. Equipment sales were recorded at $1.561 billion, up 6.4% from the third quarter in 2013. However, cost of services was $1.488 billion and cost of equipment sales was $2.308 billion. Other SG&A expenses totaled $2.283 billion for the quarter.

This was the best quarter for T-Mobile in branded postpaid net additions, coming in at 1.4 million. The branded postpaid phone net additions more than doubled quarter-over-quarter to 1.2 million. Branded prepaid net additions were up more than four times quarter-over-quarter to 411,000.

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In September, T-Mobile issued $3.0 billion aggregate principal amount of notes in a registered public offering, consisting of $1.3 billion aggregate principal amount of 6% senior notes due 2023 and $1.7 billion aggregate principal amount of 6.375% senior notes due 2025. In early October, T-Mobile used approximately $1.0 billion of the proceeds from the debt issuance to redeem its outstanding 7.875% senior notes due 2018.

On October 20, Morgan Stanley initiated coverage on T-Mobile with an Overweight rating and a $31 price target.

Shares of T-Mobile closed Monday down almost 0.5% at $27.99 and were up almost 2.5% to $28.68 in Tuesday morning trading.

The shares have a consensus analyst price target of $35.58 and a 52-week trading range of $24.50 to $35.50. T-Mobile has a market cap of about $22 billion.

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