Blog Post

As its suitors amass, T-Mobile beats out its competitors in Q2 subscriber growth

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

As potential buyers begin to circle, T-Mobile (s tmus) continued to attack the U.S. mobile market during the last quarter as if nothing has happened. Just before French ISP and mobile carrier Iliad revealed it has made an $15 billion offer for T-Mobile US, and while Sprint(s s) and SoftBank prepare to make their acquisition overtures official, T-Mobile released its second-quarter earnings results and showed that it just kept adding new customers.

It would have been very difficult for T-Mobile US(s tmus) to repeat its blowout first quarter, in which it grew by a staggering 2.4 million customers and basically dominated smartphone growth in the United States. But in Q2 T-Mobile managed to bring in a net total of 1.5 million new subscribers, putting it ahead of all of its three larger competitors.

Verizon(s vz) and AT&T’s (s t) net additions totaled 1.4 million and 634,000, respectively, while Sprint(s s) shed 334,000 net connections last quarter. The breakdown of its 1.5 million new subscribers was interesting: 908,000 postpaid connections, 102,000 prepaid connections and 460,000 wholesale connections.

T-Mobile’s strength still lies in attracting new smartphone subscribers. It saw the number of phone connections grow by 579,000, but mobile broadband connections grew also by 329,000, mostly from 4G tablets. Slates have been big growth drivers for AT&T and Verizon in the last few quarter, but this has been a weak spot for T-Mobile that it’s tried to shore up with free and discounted data promotions.

T-Mobile US CEO John Legere at CES
T-Mobile US CEO John Legere at CES

While T-Mobile’s tablet gains seem to be improving, it’s still nowhere near matching Verizon 1.14 million 4G slate additions in Q2. What’s more T-Mobile is probably making little money on the new tablets it is connecting, given many of those customers likely signed up for a free connectivity plan.

T-Mobile was the only major carrier that didn’t lose prepaid subscribers, but surprisingly it didn’t capitalize on its competitors’ losses. AT&T, Sprint and Verizon combined shed more than 1 million prepaid customers, but T-Mobile gained only 102,000.

Those customers have to be going somewhere, so they’re either making the jump to a postpaid plan or they’re migrating en masse to mobile virtual network operators (MVNOs) or regional carriers. Given the big growth Sprint and T-Mobile are seeing in their wholesale businesses, it’s most likely the latter.

T-Mobile also turned its first profit since it launched its Uncarrier assault on the U.S. mobile industry, but that $391 million gain was due to primarily to spectrum licensing deal with Verizon. T-Mobile now has more than 50 million subscribers on its network, putting it just 4.5 million connections behind the No. 3 carrier Sprint.

In all, T-Mobile had a good growth quarter, but it also appears its two biggest competitors are immunizing themselves against Uncarrier. Verizon stumbled in Q1, losing smartphone customers to T-Mobile, but it recovered spectacularly in Q2, while AT&T continues to combat Uncarrier with its Next upgrade plan. Ironically, it’s Sprint — which will likely make an official bid to buy T-Mobile this fall — that is suffering most from T-Mo’s aggressive moves in the mobile market.

One Response to “As its suitors amass, T-Mobile beats out its competitors in Q2 subscriber growth”

  1. Is T-Mobile cannibalizing Sprint something that is desirable? I don’t think so. Hopefully by the end of the year, Sprint will have their network in order so that it can launch a counter attack. Then it will be a race to the bottom between the smaller two while the big two will sit on the sidelines and watch Rome burn?