T-Mobile US has again raised its target for subscriber growth this year, after adding a net 2.3 million new customers in Q3 for a total 61.2 million. The mobile operator now expects to add 3.8-4.2 million postpaid customers under the T-Mobile brand this year, compared to an estimate in July of 3.9 million.
In the third quarter, the company gained 1.1 million branded postpaid customers and 595,000 prepaid customers. The postpaid total included 843,000 phone customers and 242,000 mobile broadband subscribers. Total device sales reached 8.9 million units, including 8.1 million smartphones. Churn among postpaid phone customers fell to 1.46 percent, down 18 basis points from a year ago.
T-Mobile's service revenues were up 11 percent year-on-year to USD 6.3 billion in Q3, while total revenues grew a slower 6.8 percent, as the switch to a handset leasing model reduced equipment revenue. Equipment revenue was down 9.3 percent year-on-year on the shift to the Jump! On Demand lease system, under which device revenues are spread out over the life of the contract. Postpaid ARPU among phone customers was also lower, down 3.7 percent year-on-year to USD 47.99 on high promotional activity and greater penetration of family plans.
Adjusted EBITDA still jumped 42 percent to USD 1.9 billion, helped by the bigger customer base, cost controls and the move away from device subsidies. The net result improved to a profit of USD 138 million from a loss of USD 94 million ago, and the operator recorded positive free cash flow of USD 411 million. T-Mobile maintained its guidance for full-year adjusted EBITDA of USD 6.8-7.2 billion, excluding any impact from the move to handset leasing and no overage fees. The operator said the impact from Jump! On Demand and its Data Stash offer was "immaterial" in Q3.
T-Mobile also said it met its target for year-end LTE coverage ahead of schedule and now reaches 300 million people in the US. The number of markets with wideband LTE coverage will expand from the current 245 to over 260 by the end of 2015, and markets with extended range LTE will grow over the same period from 204 to over 350. Capital expenditure in the third quarter was unchanged year-on-year at USD 1.1 billion and T-Mobile reiterated a target for full-year spending of USD 4.4-4.7 billion. The operator spent USD 193 million in Q3 for decommissioning the MetroPCS CDMA network and said it expects another USD 125-225 million in associated costs for the shutdown, most of which will occur in 2015.
