T-Mobile Profit Jumps to $3.46 Billion, but More Customers Leave After Rate Plan Shake-Up
T-Mobile earned $3.46 billion in the third quarter, up 27% from a year earlier, but a growing share of its customers are walking away after the carrier reshuffled its rate plans.
Revenue rose 7.4% to $23.58 billion, and postpaid service revenue climbed 9% to $16.27 billion, according to its quarterly filing, helped by last year’s purchases of UScellular and Metronet.
The weak spot was customer retention. Postpaid account churn, the share of account holders who leave each month, rose to 1.09% from 0.99% in the second quarter and 0.97% a year earlier.
That is the highest rate in the seven quarters T-Mobile reported in its filing. The carrier added 274,000 net postpaid accounts, down from 396,000 a year earlier, for a total of about 35 million.
T-Mobile blamed the higher churn on a growing number of broadband-only accounts, which cancel more often, and on “the temporary impact of our rate plan modernization,” along with seasonally higher switching.
Some customers have seen increases of as much as $6 per line, Android Headlines reported, a cost that adds up quickly for families with several lines.
Chief Financial Officer Peter Osvaldik told analysts on the earnings call that churn is likely to rise again this quarter. “Seasonally for everybody, Q4 tends to be a higher churn quarter than Q3 because of the holiday season,” he said.
Osvaldik said a rate plan change typically weighs on results for a couple of quarters, “although the Q4 impact will be much more muted.”
Wall Street still got a beat. Earnings of $3.22 a share topped the $2.86 consensus, and average revenue per account of $155.73 beat estimates, Zacks Investment Research noted, though the stock fell 9.9% over the past month.
T-Mobile kept its forecast for about 1 million postpaid net account additions this year and raised its core adjusted EBITDA outlook by $100 million at the midpoint, to $37.35 billion to $37.45 billion.
No Room for SpaceX
CEO Srini Gopalan used the call to shut the door on a deeper deal with Elon Musk’s SpaceX.
“I see no room for an MVNO with SpaceX either on the consumer side or on the physical and edge AI side,” he said, Light Reading reported.
An MVNO, or mobile virtual network operator, deal would let SpaceX sell wireless service over T-Mobile’s towers, giving the satellite company an easier path into the U.S. phone market.
“We’ve been very clear that in terms of satellite, we see it as a complementary product,” Gopalan said, adding that any arrangement with SpaceX as a customer or supplier would be “a purely commercial agreement.”
SpaceX’s ambitions keep growing. The company reportedly wants access to at least 80,000 U.S. cell sites and has Federal Communications Commission approval for up to 15,000 next-generation satellites that connect directly to phones, according to Android Central.
T-Mobile is not alone in keeping its distance. Verizon CEO Dan Schulman has also dismissed an MVNO deal, and AT&T CEO John Stankey has downplayed the competitive threat.
T-Mobile already uses SpaceX technology for its T-Satellite service, but Gopalan has said it accounts for just 0.0002% of the carrier’s network usage under normal conditions.
Former CEO Mike Sievert is leaving his post as vice chairman of the board on Nov. 1. Bloomberg has reported that parent company Deutsche Telekom put on hold plans to bid for full control of T-Mobile.
Content created by Conservative Daily News and some content syndicated through CDN is available for re-publication without charge under the Creative Commons license. Visit our syndication page for details and requirements.
