T-Mobile tops estimates, raises outlook for user gains

T-Mobile exceeded analyst’s profit estimates and raised its full-year forecast for subscriber growth even as the nation’s third-largest wireless carrier fell short of signing a million new customers for the first time in almost two years.

The company gained 890,000 monthly subscribers in the second quarter, short of the 905,000 estimate from six estimates surveyed by Bloomberg. Yet T-Mobile expects 3.4 million and 3.8 million new lucrative monthly subscribers this year, according to a statement from the Bellevue, Washington-based company Wednesday. Previously, the range was 3.2 million to 3.6 million.

Earnings were 25 cents a share, beating the 22-cent average of estimates compiled by Bloomberg.

CEO John Legere is luring subscribers by focusing on social-media marketing and free video-streaming promotions, like Binge On, without squeezing the company’s bottom line in a price war. Some of T-Mobile’s new customers may have come at the expense of No. 1 carrier Verizon Communications Inc., which reported subscriber gains Tuesday that were below analysts’ projections.

The shares were little changed at $44.88 at 10:15 a.m. in New York Wednesday.The stock had climbed 15 percent this year through Tuesday’s close.

▪ T-Mobile also narrowed its outlook for adjusted earnings before interest, taxes and amortization to $9.8 billion to $10.1 billion, from $9.7 to $10.2 billion.

▪ Sales of $9.2 billion beat the $9 billion average projection.

▪ Second-quarter net income was $225 million, compared with analysts’ estimate for $180.3 million.

▪ The average phone bill shrunk 2 percent to $47.11, exceeding the $45.62 estimate average of six analysts surveyed by Bloomberg.

▪ Wireless service margin narrowed to 36 percent from 42 percent in the first quarter. Analysts predicted a margin of 35 percent.

This story was originally published July 27, 2016 at 1:34 PM with the headline "T-Mobile tops estimates, raises outlook for user gains."