T-Mobile’s profit misses expectations

T-Mobile US reported a profit that missed analysts’ estimates as promotions that helped attract more than 1 million new monthly subscribers put pressure on the bottom line.

The company reported net income of $138 million, or 15 cents per share, for the third quarter, compared with a loss of $94 million, or 12 cents per share, a year ago. Analysts, on average, had expected a profit of 30 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 6.8 percent to $7.85 billion but missed analysts’ average estimate of $8.29 billion.

T-Mobile, led by self-styled rebel and chief executive officer John Legere, bills itself as the “un-carrier.” It uses low-cost plans along with phone leasing and rollover data allotments to draw customers from larger rivals Verizon Communications and AT&T.

As it forecast last month, the third-largest U.S. carrier added 1.1 million postpaid users — the more lucrative subscribers with higher credit quality who add multiple devices and use more data. The profit miss underscores the high costs associated with competing on price to sustain user growth.

“Subscriber growth is the most important metric for T- Mobile, but they need to show profit growth,” Walt Piecyk, an analyst at BTIG, said in a phone interview.

T-Mobile raised its forecast for 2015 postpaid net customer additions to 3.8 million to 4.2 million, from the previous guidance of 3.4 million to 3.9 million.

In the third quarter, the carrier added 843,000 monthly phone subscribers, a number that excludes tablet users. That was less than the average of 861,000 predicted by five analysts surveyed by Bloomberg.

The average customer’s monthly phone bill was $47.99, compared with projections for $47.69.

Telecom rival Sprint, based in Overland Park, releases its latest quarterly financial results Nov. 3.

This story was originally published October 27, 2015 at 9:22 AM with the headline "T-Mobile’s profit misses expectations."