|[May 01, 2014]
T-Mobile US Reports First Quarter 2014 Results and Best Ever Quarterly Performance in Branded Postpaid Net Customer Additions
BELLEVUE, Wash. --(Business Wire)--
T-Mobile (News - Alert) US, Inc. (NYSE: TMUS):
First Quarter 2014 Highlights:
Total net additions of 2.4 million, marking the first quarter ever
with more than 2 million net additions
Fourth consecutive quarter with over 1 million total net additions,
now the fastest growing wireless company
Total branded net additions of 1.8 million including branded postpaid
net additions of over 1.3 million
Total branded prepaid customer growth with 465,000 net additions
Record low branded postpaid churn of 1.5%, down 20 basis points
sequentially and down 40 basis points YoY
Fourth consecutive quarter of pro forma sequential service revenue
growth and a return to service revenue growth YoY on a pro forma
Adjusted EBITDA of $1.1 billion, down 12.2% sequentially due to the
impact of significant acceleration in customer growth
Branded postpaid ARPU of $50.01, down 1.4% sequentially compared to a
2.9% decline in the prior quarter
T-Mobile US, Inc. (NYSE: TMUS) today reported first quarter 2014 results
demonstrating continued strong momentum and record customer response to
its Un-carrier moves. The Company has aggressively focused on
eliminating consumer pain points and is delivering continued growth in
its total and branded customer base through the successful execution of
this strategy. In the first quarter, T-Mobile captured virtually all of
the industry phone growth, while successfully taking market share from
T-Mobile reported 2.4 million total net customer additions with 1.8
million total branded net customer additions for the quarter, including
branded postpaid net additions of 1.3 million and branded prepaid net
additions of 465,000. T-Mobile was once again the fastest growing
wireless company in America in the first quarter of 2014 with more than
1.2 million branded postpaid phone net additions, a result that
dramatically outperformed the competition. The strong branded postpaid
net addition performance resulted from continued momentum in gross
additions, which were up 23% quarter-over-quarter and 136%
year-over-year, and ongoing improvements in branded postpaid churn,
which was 1.5% in the quarter, down 20 basis points quarter-over-quarter
and down 40 basis points year-over-year.
"A year ago I promised that we would bring change to what I called this
arrogant US wireless industry. We are delivering on that promise and our
results reflect the growing customer revolution that we've ignited,"
said John Legere, President and CEO of T-Mobile. "We are now approaching
50 million customers, added 2.4 million net new customers in the first
quarter alone, and posted our fourth quarter of consecutive service
revenue growth, while once again adding more net new postpaid customers
than the rest of the industry combined!"
Executing on the Un-Carrier strategy to drive results:
Un-carrier moves have ushered in a consumer revolution, giving consumers
a stronger voice since the roll out began in March 2013. The Company's
key Un-carrier initiatives were as follows:
On March 26, 2013, the Company announced its radically simplified
unlimited "Simple Choice" service plan with no annual service
contract. Device financing with the Equipment Installment Plan (EIP)
provides qualifying customers with low out-of-pocket costs on some of
the most popular devices available in the US wireless industry. As of
the end of the first quarter of 2014, 75% of T-Mobile's branded
postpaid base was on Simple Choice/Value plans.
On July 10, 2013, the Company unveiled JUMP!™, a groundbreaking
approach to more frequent phone upgrades. T-Mobile had more than 5.3
million customers enrolled in JUMP! at the end of the first quarter of
On October 9, 2013, the Company announced that it would make "the
world your network - at no extra charge" - with unlimited data and
texting worldwide in 100+ countries for Simple Choice customers. At
the same time, T-Mobile announced that it had delivered nationwide 4G
LTE (News - Alert) in 233 metro areas covering 202 million people. Since then, Simple
Choice with global data has expanded to 121 countries and destinations
and 4G LTE coverage has increased to 284 metro areas covering more
than 220 million people.
On October 23, 2013, the Company un-leashed tablets and revolutionized
how customers buy and use tablets with free data for life. Customers
can receive 200 MB of free data every month with any compatible tablet
for as long as they own and use the registered device on T-Mobile's
network. In the first quarter of 2014, T-Mobile had 67,000 mobile
broadband branded postpaid net additions, principally composed of
tablets, compared to 69,000 in the fourth quarter of 2013.
On January 8, 2014, the Company announced that it would reimburse
Early Termination Fees (ETFs) for individuals and families who make
the switch to T-Mobile and trade in an eligible device. The plan also
offers a trade-in value for customers' phones. This program has seen
unprecedented customer uptake with approximately 21% of branded
postpaid gross adds taking the ETF offer in the first quarter of 2014.
In April 2014, the Company introduced 3 new programs - "Simple
Starter," "Tablet Freedom," and "Overage Freedom" - that make our
service plans and devices even more affordable, and we have eliminated
all domestic overage charges for consumers, even those on legacy plans.
Operational and Financial Highlights for the First Quarter of 2014
ended the first quarter of 2014 with approximately 49.1 million
customers, an increase of 2.4 million total customers from the end of
the fourth quarter of 2013. T-Mobile significantly grew its total
branded customer base, with 1.8 million net customer additions during
the quarter. Branded postpaid net customer additions of 1.3 million,
including more than 1.2 million phone net additions, continued the
strong momentum seen in the previous three quarters, reflecting
continued low branded postpaid churn and significantly higher gross
additions. The Company's network modernization program and strong
execution of its Un-carrier strategy contributed to a record low branded
postpaid churn rate of approximately 1.5% for the first quarter of 2014,
down 20 basis points versus the fourth quarter of 2013 and an
improvement of 40 basis points compared to the first quarter of 2013.
The branded prepaid business exhibited improved customer growth with
465,000 branded prepaid net customer additions in the first quarter of
2014, driven by the success of MetroPCS and growth in the 30 expansion
markets launched in 2013.
During the first quarter of 2014, the quality of T-Mobile's customer
base and receivables portfolio continued to improve as a result of the
implementation of its Un-carrier strategy and the effect of credit
tightening over the past two years. Service bad debt expense in the
first quarter of 2014 was down 3% year-over-year and was down 13%
quarter-over-quarter. 53% of EIP receivables were classified as Prime at
the end of the first quarter of 2014, compared to 44% at the end of the
first quarter of 2013 and 54% at the end of the fourth quarter of 2013.
The slight sequential decline in EIP receivables classified as Prime was
due to seasonal factors, most notably the tax season cash effect which
drove a slight change in customer mix.
Total revenues for the first quarter of 2014 increased by 47.0%
year-over-year, principally due to the inclusion of MetroPCS results in
the first quarter of 2014. On a pro forma combined basis, total revenues
for the first quarter of 2014 increased 15.3% year-over-year due to
higher equipment sales and growth in service revenues. Total smartphone
sales, including sales to branded postpaid and prepaid customers, were a
record 6.9 million units in the first quarter of 2014, equivalent to 92%
of total units sold, up from 91% in the fourth quarter of 2013. This
represents a penetration of 81% of the total branded customer base at
the end of the first quarter of 2014, up from 79% at the end of the
fourth quarter of 2013. On a sequential basis, total revenues increased
by 0.7% primarily due to growth in service revenues. The portion of
branded postpaid customers on Value or Simple Choice plans was 75% at
the end of the first quarter of 2014, up from 69% at the end of the
fourth quarter of 2013.
Service revenues for the first quarter of 2014 grew by 33.3%
year-over-year primarily due to the inclusion of MetroPCS results for
the full quarter. Service revenues increased by 3.3%
quarter-over-quarter primarily due to growth of the Company's customer
base, offset in part by increased adoption of Value and Simple Choice
plans, which have lower monthly service charges than traditional bundled
plans. T-Mobile's service revenues have grown in each of the last four
quarters on a sequential basis. On a pro forma combined basis, service
revenues for the first quarter of 2014 increased 4.5% year-over-year.
This represents a significant improvement over the fourth quarter of
2013, when service revenues declined by 1.1% year-over-year on a pro
forma combined basis, and marks a return to year-over-year service
Branded postpaid average revenue per user (ARPU) decreased
quarter-over-quarter by $0.69 or 1.4% to $50.01, an improvement compared
to the quarter-over-quarter decline of 2.9% in the fourth quarter of
2013. Branded postpaid ARPU again declined on a year-over-year basis due
to the increased adoption of Value and Simple Choice plans. However, the
year-over-year decline in branded postpaid ARPU of 7.5% did show an
improvement compared to the year-over-year decline of 8.6% in the fourth
quarter of 2013. Branded postpaid Average Billings per User (ABPU),
which consists of branded postpaid service revenues plus EIP billings
divided by the average branded postpaid customers in the period, was
$59.54 in the first quarter of 2014, up 3.9% compared to the first
quarter of 2013 and up 1.3% compared to the fourth quarter of 2013.
Branded prepaid ARPU for the first quarter of 2014 increased by $0.25 or
0.7% to $36.09 compared to the fourth quarter of 2013.
Adjusted EBITDA for the first quarter of 2014 was $1.1 billion, a 12.2%
decline from the fourth quarter of 2013, reflecting increased equipment
sales due to the significant acceleration in customer growth and the
success of the Un-carrier 4.0 - Contract Freedom offer. Adjusted EBITDA
margin was 20% compared to 24% in the fourth quarter of 2013.
Cash capital expenditures for the first quarter of 2014 were $947
million, up from $882 million in the fourth quarter of 2013 but down
from $1.2 billion on a pro forma combined basis in the first quarter of
2013. Cash capital expenditures reflect T-Mobile's continued investment
in network modernization and 4G LTE deployment.
T-Mobile has continued to make rapid
progress on the expansion and integration of MetroPCS. On July 25, 2013,
the Company announced the strategic expansion of the MetroPCS brand with
the planned launch of 15 new geographic markets. On November 21, 2013
the Company launched the MetroPCS brand in 15 further markets, bringing
the total of expansion markets to 30. As of March 31, 2014, the Company
has opened nearly 2,200 distribution points in these new markets.
The Company began selling T-Mobile-compatible devices to MetroPCS
customers in the second quarter of 2013 through MetroPCS branded
distribution points and has already transitioned approximately 53% of
MetroPCS customers to the T-Mobile network. More than 50% of the
MetroPCS spectrum has been re-farmed and integrated into the T-Mobile
network at the end of the first quarter of 2014.
2014 Outlook Guidance
T-Mobile expects to drive further
momentum while continuing to invest in profitable growth. With the
success of our Simple Choice plan and the continued evolution of the
Un-carrier strategy, branded postpaid net additions for 2014 are now
expected to be between 2.8 and 3.3 million.
For the full year of 2014, T-Mobile now expects Adjusted EBITDA to be in
the range of $5.6 to $5.8 billion.
Cash capital expenditures are expected to be in the range of $4.3 to
With this growth and rate plan migrations, the penetration of
Value/Simple Choice plans in the branded postpaid base is projected to
be between 85% and 90% by the end of 2014.
Quarterly Financial Results
For more details on T-Mobile's
first quarter 2014 financial results, including its "Investor Quarterly"
with detailed financial tables and the required non-GAAP
reconciliations, please visit T-Mobile US, Inc.'s Investor Relations
website at http://investor.T-Mobile.com.
For comparison purposes, pro forma combined measures presented in this
release include the combined results of T-Mobile USA and MetroPCS to
reflect the business combination for the relevant periods. See Investor
Quarterly for further details.
About T-Mobile US, Inc.:
As America's Un-carrier, T-Mobile
US, Inc. (NYSE: "TMUS") is redefining the way consumers and businesses
buy wireless services through leading product and service innovation.
The Company's advanced nationwide 4G and 4G LTE network delivers
outstanding wireless experiences for customers who are unwilling to
compromise on quality and value. Based in Bellevue, Washington, T-Mobile
US provides services through its subsidiaries and operates its flagship
brands, T-Mobile and MetroPCS. It currently serves approximately 49.1
million wireless customers and provides products and services through
approximately 70,000 total points of distribution, including
approximately 8,000 T-Mobile and MetroPCS branded locations and 62,000
third-party and national retailer locations, as well as distribution
through our websites. For more information, please visit http://www.t-mobile.com.
Q1 2014 Earnings Conference Call
T-Mobile US, Inc. will host
a conference call to discuss its financial and operational results for
the first quarter 2014 on Thursday, May 1, 2014 at 9:00 a.m. Eastern
T-Mobile Conference Call Information:
Please plan on accessing the conference call ten minutes prior to the
scheduled start time. The conference call will be broadcast live via the
Company's Investor Relations website at http://investor.t-mobile.com.
A replay of the conference call will be available for two weeks starting
shortly after the call concludes and can be accessed by dialing
888-203-1112 (toll free) or 719-457-0820 (international). The passcode
required to listen to the replay is 1767693.
This news release includes
"forward-looking statements" within the meaning of the U.S. federal
securities laws. Any statements made herein that are not statements of
historical fact, including statements about T-Mobile US, Inc.'s plans,
outlook, beliefs, opinion, projections, guidance, strategy, integration
of MetroPCS, expected network modernization and other advancements, are
forward-looking statements. Generally, forward-looking statements may be
identified by words such as "anticipate," "expect," "suggests," "plan,"
"project," "believe," "intend," "estimates," "targets," "views," "may,"
"will," "forecast," and other similar expressions. The forward-looking
statements speak only as of the date made, are based on current
assumptions and expectations, and involve a number of risks and
uncertainties. Important factors that could affect future results and
cause those results to differ materially from those expressed in the
forward-looking statements include, among others, the following: our
ability to compete in the highly competitive U.S. wireless
telecommunications industry; adverse conditions in the U.S. and
international economies and markets; significant capital commitments and
the capital expenditures required to effect our business plan; our
ability to adapt to future changes in technology, enhance existing
offerings, and introduce new offerings to address customers' changing
demands; changes in legal and regulatory requirements, including any
change or increase in restrictions on our ability to operate our
network; our ability to successfully maintain and improve our network,
and the possibility of incurring additional costs in doing so; major
equipment failures; severe weather conditions or other force majeure
events; and other risks described in our filings with the Securities and
Exchange Commission, including those described in our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on February
25, 2014. You should not place undue reliance on these forward-looking
statements. We do not undertake to update forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
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