T-Mobile US Inc. added more customers than analysts estimated and boosted its subscriber forecast for the year, as it continues to challenge rivals with cheaper plans that are putting a dent in industry profits.
The fourth-largest U.S. wireless carrier added 1.4 million customers through its own brands, exceeding the 1.14 million average projection in a Bloomberg survey of 10 analysts. It hopes to pass Sprint and become the third-largest carrier.
But the competition to be the lowest-priced carrier has taken a toll on the bottom line. The company reported a third-quarter net loss of 12 cents a share compared with a loss of 5 cents a year ago.
Chief Executive Officer John Legere has positioned the company as the “un-carrier” by cutting data-plan prices, financing phones and offering new customers rewards of as much as $650 for switching service providers. Larger rivals AT&T Inc., Verizon Communications Inc. and Sprint Corp. have been forced to respond with promotions and discounts to hold on to subscribers, causing a strain on profits. Both AT&T and Verizon missed third-quarter earnings estimates last week. Sprint will report Nov. 3.
Legere boosted his forecast for subscribers, projecting that T-Mobile will add 4.3 million to 4.7 million new customers in 2014. The carrier had previously said it expected to add 3 million to 3.5 million monthly subscribers this year and to surpass Sprint in combined prepaid and postpaid customers.
“T-Mobile’s performance comes at the expense of Sprint and AT&T, and they look even more vulnerable as we head into the all-important holiday selling season,” said Kevin Roe, an analyst with Roe Equity Research LLC, based in Dorset, Vt.