T-Mobile US adds 1.1 million new customers in second quarter

The carrier is seeing a surge in demand for its no-contract plans

T-Mobile US had 1.1 million net customer additions in the second quarter, as customers backed its new no-contract plans.

The company added 678,000 new branded customers, its strongest growth in four years. It had lost 330,000 branded customers in the same quarter last year.

T-Mobile ended the quarter with about 44 million customers, an increase of more than 10 million customers over the previous quarter, of which 8.9 million came from its acquisition of MetroPCS Communications on May 1, it said Thursday.

The carrier aims to increase the number of branded post-paid customers by another 500,000 to 700,000 in the second half of the year, majority owner Deutsche Telekom said.

T-Mobile's revenue for the quarter grew by about 27.5 percent year-over-year to US$6.3 billion, driven by the consolidation of MetroPCS and strong handset revenue including from sales of Apple's iPhone from April 12. New and existing customers acquired 4.3 million smartphones in the quarter.

The cost of customer acquisition and marketing, however, went up in the quarter, leading to a loss of $16 million from net profit of $207 million in the same quarter last year.

The reported results include two months - May and June - of MetroPCS results. The company expects full-year adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), including MetroPCS, to be up to $5.4 billion.

T-Mobile has recently attempted to separate its mobile service and handset contracts, which its calls its "un-carrier" strategy. It saw its average revenue per user (ARPU) for branded postpaid users decrease year-over-year by 6.5 percent to $53.6 as customers adopted new plans which have lower service charges than traditional plans bundled with discounted handsets, the company said. ARPU for branded prepaid customers increased by 29.7 percent to $34.78 because of the inclusion of MetroPCS results.

In March, T-Mobile introduced plans that let consumers pay for a new phone in installments rather than sign a two-year contract. Customers can also use their own unlocked device, a service that is being now extended to MetroPCS customers.

It launched in July an upgrade offer that will let subscribers for a monthly fee of $10 trade in their existing phones for a new model at a T-Mobile store as often as twice per year, once they've been on its Jump plan for at least six months.

The company's 4G LTE network rollout has been ahead of plan with 157 million people covered in 116 metro areas.

Deutsche Telekom reported a revenue increase of 5.4 percent to €15.2 billion in the quarter, also benefiting from the MetroPCS acquisition. Organic revenue growth was 2.1 percent, the company said. Net profit was €530 million up 10 percent from the same quarter last year, the German company said. It reported net additions of 1.38 million mobile contracts across the group, with 434,000 additions in Germany.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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