October 30, 2018 / 8:24 PM / 20 days ago

T-Mobile exceeds expectations for phone subscribers, profit

(Reuters) - T-Mobile US Inc (TMUS.O) on Tuesday exceeded Wall Street’s quarterly estimates for net new phone subscribers and profit, driven by its competitive wireless plans and trade-in offers for iPhones aimed at fending off its bigger rivals.

FILE PHOTO: A T-Mobile logo is advertised on a building sign in Los Angeles, California, U.S., May 11, 2017. REUTERS/Mike Blake

Shares of the Bellevue, Washington-based company rose over 3 percent to $66.00 in extended trading.

The third-largest U.S. wireless carrier by subscribers is awaiting regulatory approval for its deal to buy smaller rival Sprint Corp (S.N) as it strives for more scale to compete with Verizon Communications Inc (VZ.N) and AT&T Inc (T.N).

The company still expects to close the merger in the first half of next year and has so far received approval from half of the state commissions that are reviewing the deal, T-Mobile Chief Executive Officer John Legere said on a conference call with analysts.

“As you can see, we are making progress,” Legere said.

T-Mobile added a net 774,000 phone subscribers who pay a monthly bill during the third quarter, up from 595,000 net new subscribers it added in the same quarter last year.

The results were well ahead of analyst expectations for 628,000 net new subscribers, according to research firm FactSet.

The growth was helped by new wireless plans aimed at certain users, such as those over 55 and people in the military, which helped T-Mobile gain new customer segments.

T-Mobile said it now expects to add 3.8 million to 4.1 million net new postpaid customers for the full year, up from its previous expectations of between 3 million to 3.6 million.

Wall Street analysts watch the so-called “postpaid” customer figure, because those users pay a recurring bill and are more valuable to the carriers.

Jonathan Chaplin, an analyst with NewStreet Research, said the results were very strong.

“They are gaining traction in new market segments and new geographies,” he said. “We think they have a long way to run.”

T-Mobile’s revenue rose to $10.84 billion from $10.02 billion, beating analysts’ estimates of $10.72 billion, according to Refinitiv data.

Its net income rose to $795 million, or 93 cents a share, in the quarter ended Sept. 30, from $550 million, or 63 cents a share, a year earlier.

The company said net income was impacted during the quarter by $53 million in costs related to the pending Sprint merger.

Analysts were expecting the company to report a profit of 85 cents per share.

Last week, the largest U.S. carrier Verizon reported adding a net 295,000 phone subscribers during the third quarter, beating estimates of 161,000 new subscribers. Separately, AT&T gained a net 69,000 phone subscribers, compared with analysts’ estimates of a net drop of 22,000 subscribers.

Reporting by Akanksha Rana in Bengaluru and Sheila Dang in New York; Editing by Shounak Dasgupta and Grant McCool

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