T-Mobile US Pulls 1M Net Customers in 3Q2013

AT&T, Sprint, and Verizon can't ignore T-Mobile US for much longer. The company reported it had gained more than one million net customers in the third quarter of 2013.   Gains included 648,000 net postpaid customers, leading the industry for the second straight quarter. Compare that to Sprint's losses last quarter and it's time to worry in the executive suite.

From all its reported 3Q13 numbers, T-Mobile is on a roll, with a second consecutive quarter of sequential service revenue growth, more prepaid customer additions, EBDITA up 6.2 percent on a quarter to quarter basis and no change in postpaid churn customers.

"Our momentum is great and we have confidence that we can continue to deliver sustainable and profitable growth," John Legere, President and CEO of T-Mobile said in the November 5 press release touting the latest numbers.

T-Mobile has hit the U.S. industry with a flurry of "Un-carrier" initiatives over the past year, including a simplified service plan with no annual contract, a JUMP! program for frequent phone upgrades, unlimited 2G data and texting worldwide in over 100 countries for Simple Choice and business customers, and 200 MB of free data every month with every tablet.

While ARPU on postpaid customers is down by $1.40 to $52.20 because customers are picking up simplified, lower-cost plans, T-Mobile is getting more revenue through increased data plan purchases. For the full year, T-Mobile expects to make between $5.2 to $5.4 billion, adding between 1.6 to 1.8 million postpaid customers for 2013.

T-Mobile's growth has to ultimately come at someone's loss. The most apparent victim appears to be Sprint, which lost a net total of 313,000 customers last quarter, a little less than half of what T-Mobile picked up in total. AT&T says it netted363,000 postpaid subs last quarter while Verizon said it pulled a whopping 972,000 postpaid "connections" during the same time period.

Sprint is thinking (or hoping) to win customers back by promising higher LTE speeds, dropping numbers from 50 to 60 Mbps to 1 to 2 Gbps, but it's hard to say how real those expectations are, given the company's floundering with WiMAX and its fumbling with a 3G HD voice rollout. Certainly parent SoftBank has the deep pockets to finish an ambitious network upgrade, but Sprint has lost its marketing mojo compared to the Take-no-prisoners style of Legere & company.

T-Mobile also seems to have a sharper focus on the enterprise space than Sprint and better leverage with multinationals with its ties to parent Deutsche Telekom. I've received several briefings on T-Mobile's enterprise strategy while I can't recall the last time I've been pitched from anyone representing Sprint.

At risk of sounding cliché, the next twelve to twenty four months are crucial to both companies. If T-Mobile can continue to win market share as it upgrades its network to LTE, it will start taking customers away from AT&T and Verizon as well as Sprint. For its part, Sprint likely has one more shot at cleaning up its act before it slips from number three to number four in the U.S. market.