A trend toward thrift has U.S. consumers flocking to low-cost mobile plans and 5G service, helping carrier T-Mobile beat Wall Street expectations for quarterly wireless new subscribers.
T-Mobile has been the telecommunications company with the majority of subscribers in the US market for the past three quarters, thanks to discounted packages and the 5G advantage gained after acquiring the carrier Sprint in 2020 for $23 billion.
The latest figures show that the carrier added 760,000 postpaid phone subscribers, the highest in eight years, surpassing rivals such as AT&T and Verizon as well as the 708,800 subscribers forecast by experts.
T-Mobile’s second-quarter 2023 revenue fell 2.6% to $19.02 billion, below estimates of $19.31 billion, according to Refinitiv data. But the carrier still saw growth in both prepaid and postpaid subscribers in “a highly saturated market.”
Still, analyst Jamie Lumley from Third Bridge said the year-over-year decline could be a sign that “the power of pricing strategies” is starting to wane as the market stabilizes.
T-Mobile raised its full-year forecast for wireless subscriber growth, expecting the number to increase to 5.6 million to 5.9 million, up from 5.3 million to 5.7 million previously.
The carrier has seen a large number of customers opt for low-cost plans like “Go5G Plus” and “Phone Freedom,” instead of the three-year contracts offered by its competitors.
T-Mobile's customer churn rate is also better than its competitors, at 0.77%, compared to Verizon's 0.83%/month and AT&T's 0.79%.
Meanwhile, the number one carrier in the US market - Verizon also had a higher-than-expected revenue quarter, mainly thanks to cost cuts and increased wireless subscribers for business customers, as well as super-fast 5G network.
American telecommunications companies are facing a media crisis, starting with some information published by the WSJ about abandoned lead cables of the carriers causing environmental pollution, including locations operated by Verizon.
“This is a historical issue, we don’t have a good record of the amount of lead on the cables,” said Anthony Skiadas, Verizon’s chief financial officer, adding that it was “too early” to predict the potential financial impact.
Hargreaves Landsdown analyst Matt Britzman said the issue “will be a cloud over the industry until there is credible evidence of financial or environmental impact”.
(According to Reuters)
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