T-Mobile Q2 profit rises to $3.24B as postpaid revenue climbs 13%

Postpaid account growth slows as premium plan migration continues

T-Mobile’s second-quarter earnings exceeded analyst profit expectations but revealed a deceleration in the customer growth that has driven the carrier’s recent performance. The company reported net income of $3.24 billion, or $2.99 a share, compared with $3.22 billion, or $2.84 a share, a year earlier. The FactSet consensus had called for earnings of $2.59 a share, according to analysts polled by the firm.

The quarter’s figure includes merger-related costs from T-Mobile’s acquisition of USCellular.

Revenue rose 7.9% to $22.79 billion, below analyst estimates of $22.95 billion. T-Mobile’s shares fell as much as 5% in premarket trading following the release.

The growth was concentrated in the company’s postpaid business, where service revenue increased 13% year-over-year to $15.85 billion. T-Mobile added 277,000 postpaid net accounts during the quarter, including phone and broadband customers. While that figure topped Wall Street’s estimate of 272,300, it represented a 13% decline from the same period last year.

Average monthly postpaid service revenue per account rose 2% year-over-year to $152.91, reflecting the company’s push to move customers onto higher-priced premium rate plans. Much of the new account growth is occurring in that premium tier, the company said.

For the third quarter, T-Mobile said it expects 250,000 net account additions.

“We continue to bring new families and businesses to T-Mobile in a durable and profitable way,” said Chief Executive Srini Gopalan, adding that the company sees further growth ahead in both wireless and broadband as it continues to invest in its network and technology.

For the full year, T-Mobile maintained its guidance for 950,000 to 1.05 million postpaid net account additions. The company also backed its projection for core adjusted earnings before interest, taxes, depreciation and amortization of $37.1 billion to $37.5 billion. T-Mobile said it expects full-year average revenue per account to grow at the high end of its prior 2.5% to 3% forecast.