T-Mobile is capping off the first calendar year of its Uncarrier strategy with a quarter of more customer additions than it's seen in years. The carrier says in its Q4 2013 results that it now serves 46.7 million customers, an increase of over 13 million year-over-year. This quarter alone it saw the addition of 869,000 postpaid customers — a major shift from losing 515,000 postpaid customers this quarter last year. T-Mobile says it hasn't done this well on postpaid since 2005.
More customers, more losses
But despite the gain in customers, T-Mobile continues to take a hit on overall earnings, posting a loss of $20 million, compared to a loss of $8 million from the prior year's quarter. In part, that's because T-Mobile has begun spending more money in order to get new customers — a cost up 40 percent year-over-year — and it's ultimately seeing less revenue from some of the most valuable ones. Average revenue per user for postpaid dropped around 9.4 percent from this quarter last year, lending to the increased losses.
Revenue for the quarter was up, though how much depends on whether you factor in MetroPCS, which has been folded into the company since this time last year. Including MetroPCS, T-Mobile saw revenues leap to $6.83 billion for Q4 from $4.9 billion the prior year; without MetroPCS, it still sees a 10 percent improvement on the back of strong equipment sales. Smartphones in particular soared this quarter, with T-Mobile selling 6.2 million units during Q4 2013, up from just 2.8 million in the prior year's quarter.
In a statement, T-Mobile CEO John Legere says that its fourth quarter numbers prove the company's new strategy is working. "Customers are fed up with the old ways and are voting in favor of choice, innovation and doing business with a company that cares about them and is willing to earn their business," Legere said. Earning their business is continuing to come at a cost, but for T-Mobile, that appears to be a cost worth bearing as it begins to improve its services and gain attention in the market.
Update: In a conference call discussing its quarterly earnings, members of T-Mobile's executive team expressed a positive outlook on the company's ability to turn its newfound growth into profitability as it moves forward, though they acknowledged that costs involved with its Uncarrier initiatives may not turn around immediately.
Some of its more recent Uncarrier plans have apparently been off to a strong start though, including its offer to pay ETF fees for customers transferring from other carriers. T-Mobile also said that its free data offer for tablets has been successful in getting new customers to try its network, and it suspects that many will eventually convert into paying tablet or smartphone customers.
Legere declined to comment on the possibility of further industry consolidation.