How Long Can T-Mobile US Sustain its Marketing Attack?

By

Lots of firms in the telecom business have experience with growth strategies based on gaining customers but losing money. And that is why T-Mobile US is going to have a tough time maintaining its present marketing program over the long haul.

T-Mobile US adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2013 was $1.239 billion, a 7.8 percent decline from the third quarter of 2013, reflecting increased promotional expenditures.

And that’s the crux of the problem. T-Mobile US is winning customers, but the marketing costs to gain those customers are hitting earnings.

The upside, in the fourth quarter of 2013, included net customer additions of more than 1.6 million, including 981,000 total branded net customer additions with 869,000 branded postpaid net additions.

The gains included net branded postpaid phone net growth of 800,000 and 69,000 mobile broadband net additions.

T-Mobile US also recorded its third consecutive quarter of sequential service revenue growth. Total revenues for the fourth quarter of 2013 increased by 39.1 percent year-over-year, but most of that was due to acquired MetroPCS subs.

On a sequential basis, total revenues (both service plans and devices) increased by 2.1 percent, principally due to higher equipment sales revenues on record smartphone sales.

Service revenues increased by 0.6 percent quarter-over-quarter primarily due to growth of the Company's customer base, offset in part by increased adoption of Value and Simple Choice plans, which have lower monthly service charges.

But excluding the impact of the MetroPCS acquisition, T-Mobile US revenue declined in the fourth quarter of 2013.

Compared to pro forma combined service revenues for the fourth quarter of 2012, service revenues for the fourth quarter of 2013 declined 1.1 percent year-over-year.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2013 was $1.239 billion, a 7.8 percent decline from the third quarter of 2013, reflecting “increased promotional expenditures,” T-Mobile US said.

Branded postpaid average revenue per user (ARPU) decreased quarter-over-quarter by $1.50 or 2.9 percent to $50.70, primarily as a result of the continued rapid adoption of Value and Simple Choice plans, which deliver lower monthly ARPU due to lower service charges compared to bundled equipment and service plans.

Branded prepaid ARPU for the fourth quarter of 2013 increased by $0.13 or 0.4 percent to $35.84 compared to the third quarter of 2013.

And that’s the challenge for T-Mobile US. It is adding customers, but sacrificing profit margin and earnings to do so. Just how long it can continue to do so will be the issue. 




Edited by Cassandra Tucker
Get stories like this delivered straight to your inbox. [Free eNews Subscription]

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Tech Innovation in iGaming

By: Contributing Writer    11/29/2023

iGaming is one of the fastest growing industries on the internet. For those who may not be aware, iGaming refers to online casinos, online slots, poke…

Read More

8 Underrated Features of Your Mobile Device You Probably Didn't Know About

By: Contributing Writer    11/21/2023

It is easy to get lost in all the new phone releases when multiple happen yearly. Consequently, most new functions go unnoticed because people do not …

Read More

Navigating the Launch: A Step-by-Step Guide to Bringing Your Product to Market

By: Contributing Writer    11/15/2023

Embarking on the journey to bring a new product into the marketplace is an exhilarating adventure that blends the thrill of innovation with the meticu…

Read More

Running MySQL on AWS: Step by Step

By: Contributing Writer    11/15/2023

MySQL on AWS is the deployment of the MySQL database system on Amazon Web Services (AWS) cloud platform. MySQL is one of the most popular open-source …

Read More

4 Easy Responsive Image Techniques

By: Contributing Writer    11/15/2023

Responsive images are a fundamental component in responsive web design. They adapt to the size of the user's screen, delivering the best user experien…

Read More