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

Enhancing Cybersecurity Measures for Modern Businesses

By: Contributing Writer    7/2/2025

Cyberattacks are rising, and businesses of all sizes feel the pressure. Small companies often think they're too small to be targets. They aren't. Hack…

Read More

Lessons Learned from Enterprise Oracle Cloud Migrations

By: Contributing Writer    7/1/2025

Switching to Oracle Cloud can feel daunting. Security risks, unexpected expenses, and performance troubles often turn what seems like an effortless up…

Read More

Protecting Business Assets with Smarter Security Frameworks

By: Contributing Writer    7/1/2025

Protecting your business is more challenging than ever. Cyber threats are increasing every day. Hackers target small and large businesses alike, searc…

Read More

Emerging Trends in Technology and Their Impact on Future Innovations

By: Contributing Writer    7/1/2025

Technology is changing faster than ever. Business owners often struggle to keep up. What's trending today might be outdated tomorrow. Falling behind c…

Read More

Tech Podcast Award Winners Bring Excitement and Enthusiasm to a Range of Important Tech Topics

By: TMCnet Staff    6/18/2025

Tech Podcast Award winners produce engaging, informative, and often entertaining content, bringing valuable insight from industry front lines to the e…

Read More