T-Mobile TMUS-Q added fewer wireless subscribers in the fourth quarter than analysts had expected, as rivals extended aggressive deals and offers to lure customers.
Shares of the company fell about 3.4 per cent in premarket trading on Wednesday.
During the October-December period, telecom operators typically ramp up promotions around Black Friday and Cyber Monday, offering steep discounts on devices and plans to capitalize on holiday shopping.
Verizon VZ-N, under its new CEO who has been working on the company’s turnaround, added its highest quarterly wireless subscribers in six years during the fourth quarter, thanks to deals such as four phone lines for US$100 per month.
“There was heightened device-centric competitiveness from one of our principal competitors, who was trying to get some headline postpaid phone growth,” T-Mobile finance chief Peter Osvaldik told Reuters.
T-Mobile still added 962,000 monthly-bill-paying phone customers in the quarter, the highest among the big three U.S. wireless carriers. But the number fell short of the 981,330 additions expected by analysts polled by FactSet.
The churn rate, the percentage of customers who discontinue service, stood at 1.02 per cent for T-Mobile’s postpaid services, compared with 0.92 per cent a year earlier.
Canadian telecoms eye paying down debt amid sluggish market
Total revenue came in at US$24.33-billion, compared with estimates of US$24.11-billion, according to data compiled by LSEG.
This was helped by more customers opting for T-Mobile’s premium plans that bundled subscriptions for Netflix and Hulu.
“We continue to see new customer accounts... taking our premium plans at 60 per cent take rates,” Osvaldik said.
T-Mobile projected annual adjusted free cash flow between US$18-billion and US$18.70-billion, below analysts’ average expectation of US$18.90-billion, according to Visible Alpha.
The cash flow guidance was likely impacted by higher integration costs related to the company’s merger with UScellular.