T-Mobile US continued to bolster its subscriber base in the last quarter of 2014, but the real news when the company unveiled its earnings report Thursday was in a place CEO John Legere rarely focuses on — the bottom line.
The company added 2.1 million subscribers in the final quarter and 8.3 million total in 2014, keeping it the fastest-growing wireless company in the U.S. But revenue was up 19.4 percent year-over-year, yielding a $101 million profit. The 12 cents per share earnings beat analysts’ expectations of 9 cents per share.
“2014 was the best year of growth in company history,” CEO John Legere said in a statement. “Our Un-carrier moves helped us blow away the competition. The best is yet to come as the future looks bright in 2015.”
The Un-carrier strategy has triggered many consumers to switch to T-Mobile, but the Bellevue company’s much larger competitors are beginning to follow Legere’s lead. Last month, AT&T followed in T-Mobile’s footsteps with a data rollover plan, and all wireless carriers are diminishing the role of two-year contracts in favor of monthly installment plans, a move pioneered by T-Mobile.
T-Mobile now has 55 million subscribers. Sprint remains in third place in the subscriber race with 55.9 million. AT&T and Verizon Wireless have a comfortable lead with 121 million and 125 million subscribers, respectively.
The revenue spike is good news for T-Mobile. Many Un-carrier moves have yielded customers because they lower monthly bills, but sustained growth and profitability is a challenge if price is the only value consumers associate with a company. Legere has said in the past T-Mobile isn’t using price-oriented marketing, but its shakeups have resulted in an industry price war that AT&T and Verizon are better equipped to survive.
T-Mobile and Sprint, both of which have sought to offer more affordable plans because their networks weren’t as robust as AT&T, have the largest churn rates in the industry, meaning they lose the most subscribers. In that regard, there was more good news in T-Mobile’s year-end results. The company’s churn rate dipped from 1.69 percent in 2013 to 1.58 percent last year. The drop indicates growing loyalty, but T-Mobile is still far behind AT&T’s and Verizon’s sub-1 percent rates.