As per usual, there was plenty of snark to be had on T-Mobile’s Valentine’s Day fourth quarter earnings call, with CEO John Legere blasting Sprint and Verizon’s recent unlimited campaigns as moves that “can only be deemed desperation.”
But first, the metrics.
In an announcement that came as little surprise, T-Mobile revealed fourth quarter results in which service revenue grew 11 percent, net Income increased 31 percent, and earnings per share grew 32 percent year over year.
Revenue of $10.18 billion was up 23 percent year over year and beat Wall Street estimates by more than $320 million. Earnings per share for the quarter also surpassed estimates by 17 cents.
Full year results also showed growth, with 2016 service revenues up 12 percent to $27.8 billion, total revenues up 16 percent ot $37.2 billion, net income up 99 percent to $1.5 billion, and earnings per share that more than doubled (106 percent growth) to $1.69.
“These results are proof that doing right by customers is also good for shareholders. Not only are customers flocking to T-Mobile, but we’re also producing rock-solid financial results,” Legere said in a statement.
Legere’s words on Verizon and Sprint’s recent unlimited promos, however, were less tame. He characterized Sprint’s deep discounted offers as “tantalizing prices” that entice customers but eventually “explode.”
“It’s a fake price on a network that doesn’t work, with CapEx that’s not being put into it,” Legere quipped.
And Legere followed up by implying Verizon’s complete turnaround on unlimited was tacit acknowledgement that the latter’s network has lost its edge. T-Mobile, he said, is ready to compete.
“The thing you can learn from that is they finally agree, their network advantage is over. Welcome to the game Verizon, let’s compete on price, let’s compete on network,” Legere said. “We’re playing from a position of strength. Unlimited is who we are.”
Verizon’s move aside, Legere noted porting ratios so far in the first quarter jumped following T-Mobile’s Un-carrier Next announcement in January. According to Legere, porting ratios so far in the first quarter stand at 2.0 for AT&T and 1.5 for Sprint. Verizon’s, he said, increased to 2.28 from a historical average of around 1.5.
Those figures bode well for T-Mobile’s first quarter given its fourth quarter net add numbers.
More Q4 Un-carrier stats
As the Un-carrier announced last month, T-Mobile pulled in 2.1 million total net additions, including 1.2 million postpaid net additions and 933,000 postpaid phone net additions. T-Mobile also snagged 541,000 branded prepaid net additions. Churn stood at 1.28 percent for postpaid and 3.94 percent for prepaid, which Legere said in January were “best ever” figures for the fourth quarter.
CFO Braxton Carter said the postpaid upgrade rate was 10 percent in the fourth quarter, up from 7 percent in the third quarter but flat year over year. The number of smartphones sold or leased in the fourth quarter was down slightly to 9.9 million from 10 million the year prior.
CTO Neville Ray indicated two-thirds (67 percent) of T-Mobile voice traffic is now carried over Voice-over-LTE (VoLTE), up from 39 percent the year prior. Around 70 percent of the Un-carrier’s spectrum assets are dedicated to LTE (up from 52 percent a year ago), a figure Ray said is expected to edge closer to 80 percent in 2017.
According to Ray, T-Mobile now has around 1,000 small cells up and running with “thousands more” on the way in the coming year. Ray said that move isn’t because the Un-carrier needs to densify, but is a shift in preparation for both 5G and lighting up 5 GHz spectrum for LTE later in 2017.
Additionally, Legere said T-Mobile is looking to open some 2,500 retail locations in 2017, including 1,000 T-Mobile stores and 1,500 MetroPCS locations. Legere said those openings would be heavily loaded into the first half of the year.
