T-Mobile reports a quarterly profit as it adds customers

T-Mobile US beat analysts’ profit estimates as the fourth-largest U.S. wireless carrier’s promotions and price cuts helped lure more customers.

Fourth-quarter earnings before interest, taxes, depreciation and amortization rose 41 percent to $1.75 billion, the company said Thursday. Analysts had predicted $1.65 billion, according to the average of estimates compiled by Bloomberg. Revenue rose 19 percent to $8.2 billion, also exceeding estimates.

After factoring in those numbers, fourth-quarter net income was $101 million, or 12 cents a share, compared with a net loss of $20 million a year earlier, T-Mobile said.

T-Mobile, which is majority owned by Deutsche Telekom, has been leading the industry with offers such as contract buyouts, free international roaming and rollover data. The company even changed its credit standards to accept a wider group of customers to better compete with Overland Park-based Sprint, which is starting to win over subscribers under the leadership of new chief executive officer Marcelo Claure.

“One of the biggest debates on T-Mobile has been: When will profits kick in?” Colby Synesael, an analyst with Cowen & Co., said in an interview before the earnings report. “They’ve said they take a balanced approach to subscriber growth and profitability.”

T-Mobile ended last year with 55 million wireless customers, of which 27.2 million were monthly subscribers, closing in on third place in the U.S. As of December, Sprint had 55.9 million total wireless customers and 29.9 million monthly subscribers. T-Mobile projected it will add 2.2 million to 3.2 million branded postpaid users this year, a slower pace than last year.

“It is a deceleration, but the level they were achieving on was unsustainable,” said Synesael, who was projecting as many as 2.8 million additions in 2015. “Being north of 3 million would be best in the industry.”

T-Mobile, which is based in Bellevue, Wash., late Wednesday named Mike Sievert as its new chief operating officer to replace Jim Alling, who had led T-Mobile for a few months in 2012 before CEO John Legere took over.

Since Deutsche Telekom brought in Legere, T-Mobile has turned around from losing customers to AT&T and Verizon Communications to being the German company’s biggest driver of growth. The unit’s revival has also made it an important bargaining chip for Deutsche Telekom as it drew offers last year from Sprint and French carrier Iliad.

This story was originally published February 19, 2015 at 9:00 AM with the headline "T-Mobile reports a quarterly profit as it adds customers."