T-Mobile’s growth sets the bar for Sprint to stay No. 3

The bar is set for Sprint Corp. to remain the nation’s No. 3 wireless carrier.

T-Mobile US Inc. set it Tuesday by reporting another big jump in its total subscribers. The magenta carrier said it added 1.818 million customers during the first three months of the year, giving it 56.836 million.

Sprint ended last year with 55.929 million. To stay ahead of T-Mobile, Overland Park-based Sprint needs to have added more than 907,000 subscribers through March of this year.

Sprint will report its subscriber count and first-quarter earnings report next Tuesday. The last time Sprint added more than 907,000 customers in any quarter was early 2012.

“They don’t want to fall to No. 4,” said Berge Ayvazian, a senior analyst at Wireless 20/20.

It’s one reason for Sprint’s continuing Cut Your Bill in Half campaign, the introduction of a free Galaxy 6 phone lease for a new unlimited data offering and plans to open more Sprint stores in a deal with the recovering RadioShack chain.

“They’ve pulled out all the stops,” Ayvazian said. “Anything more would look like an act of desperation.”

Sprint spokesman Scott Sloat declined to discuss the company’s first-quarter results but said the companies’ relative rankings aren’t that important.

“The bottom line is customers don’t care who is third or fourth, so we are focused on turning around Sprint to win in the long term by offering customers value, a great customer experience and a consistent and reliable network,” Sloat said.

At stake is more than who’s No. 3 and who’s No. 4. The carriers are fighting for momentum in the marketplace. T-Mobile clearly has it now, running ahead even of the biggest carriers, Verizon and AT&T, which had already reported modest results. Each of the biggest carriers relied heavily on customers adding tablets to their accounts rather than the company adding phone customers to boost subscriber totals.

Ayvazian said there’s room for Sprint to get in on the growth game if its Cut Your Bill in Half campaign, which specifically targets AT&T and Verizon customers, is working.

Roger Entner, who follows the industry at Recon Analytics, said he believes the Cut Your Bill in Half campaign is beginning to resonate with consumers.

“I think it’s starting to bring numbers in,” Entner said.

He’ll be looking for confirmation in Sprint’s report next week.

T-Mobile said Tuesday that it’s gaining phone customers at the expense of each of its rivals. More phone customers are leaving all three other carriers to become T-Mobile customers than the other way around. In the industry, this is called the porting ratio, and it heavily favors T-Mobile.

Chief executive John Legere emphasized that T-Mobile’s porting ratio had gotten bigger against Verizon, AT&T and Sprint in the first quarter and continued to grow in the current quarter.

Specifically, he said T-Mobile was gaining 2.75 Sprint customers for every T-Mobile customer that switches to Sprint. The ratio had been 2.2 to 1 in T-Mobile’s favor during the last three months of last year.

This kind of growth has allowed T-Mobile to close what had been a 9.8 million subscriber lead by Sprint in mid-2013.

Legere, who had prematurely boasted that T-Mobile would pass Sprint last year, didn’t make any promises Tuesday. But he will be watching.

“It will be interesting to see Sprint’s earnings” report, Legere told analysts.

T-Mobile said its revenues increased 13 percent to $7.78 billion, but promotions and rate cuts led to a net loss of $63 million.

T-Mobile raised its forecast for phone subscriber growth this year to 3 million to 3.5 million, up from a February outlook of 2.2 million to 3.2 million. The forecast counts only postpaid subscribers who use the service and are billed each month, not prepaid subscribers, who buy service each month ahead of using their voice minutes and allocated data.

This story was originally published April 28, 2015 at 12:28 PM with the headline "T-Mobile’s growth sets the bar for Sprint to stay No. 3."