T-Mobile Misses Revenue, Profit Estimates

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By Jacob Maslow

T-Mobile US Inc. (NYSE: TMUS) missed revenue and profit estimates for the quarter. The company’s initiatives to attract new customers, which included offering lower priced plans, affected earnings.

Shares for T-Mobile, the third-largest wireless carrier in the US, dropped 3.4% to trade at $39.99 Tuesday morning. Shares have risen 54% this year.

Compared to a year earlier, the company has posted average revenue per user dropped from $49.84 to $47.99. Net customer additions fell flat by just 2.3 million.

T-Mobile changed its pricing plans to make them more affordable and also increased data allotments. Additionally, T-Mobile introduced a $5 trade-in offer for Apple Inc.’s (NYSE: AAPL) iPhone 6. To attract customers from competitors, T-Mobile added perks such as free music streaming.

T-Mobile raised its 2015 guidance on Tuesday for the third time this year. The company now expects to add up to 4.2 million postpaid users, which is up from the 3.4 million to 3.9 million figure it forecasted earlier.

The company reported $411 million in free cash flow and expects positive earnings moving forward. This is the first time T-Mobile has generated free cash flow, and the company added more monthly subscribers than any other wireless carrier in the industry.

T-Mobile’s net income was $138 million for the third quarter, which equates to $.15 per share. One year ago, the carrier reported a loss of $94 million, which equated to $.12 per share.

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