Nobody knows now whether T-Mobile US can keep its turnaround humming, but there is no doubt its performance, between the start of 2012 and the end of 2013, has been among the more stunning, and rapid, changes in mobile market momentum many have ever seen.
Looking at revenue over that period, while Verizon Wireless continued to power along with growth of about eight percent, T-Mobile US experienced a revenue downturn that gained momentum all year in 2012, losing four percent in the first quarter, five percent in the second quarter, nearly nine percent in the third quarter and then nearly 10 percent in the fourth quarter of 2012, according to analysts at UBS.
Though the impact is hard to assess, T-Mobile US winning the right to sell the Apple iPhone in the second quarter had to help, though the change apparently was not enough to slow the decline immediately.
Probably equally important was the series of moves T-Mobile US made in 2012 to end the contract requirement, and the additional moves T-Mobile US has made to increase the value portion of its offers.
But revenue growth is only part of the story. T-Mobile US has to find some way to keep growing revenue, but also return to making profits, something it has not yet done.
“Pricing actions, plan changes, and the factoring of receivables suggest a more disciplined approach with an eye towards managing cash flow,” noted Jeffries analyst Mike McCormack. “Nevertheless, we continue to see risks to the story.”
By way of comparison, AT&T and Sprint both saw deceleration of revenue growth. AT&T dipped from about seven percent quarterly revenue growth to about five percent growth. Sprint dropped from about seven percent to one percent revenue growth.
Looking at post-paid subscriber growth, in the fourth quarter of 2013, when the T-Mobile US rebound had been underway for a full year, T-Mobile US added 800,000 high-margin, post-paid subscribers to its network.
By way of comparison, AT&T reported 566,000 post-paid additions, while Verizon Wireless added 1.6 million post-paid subscribers.
Again, though neither subscriber growth or revenue growth necessarily relates directly to profits, subscriber growth and revenue growth, over time, will correlate with ability to make a profit.
The point is that the rapid T-Mobile US subscriber and revenue turnaround is notable and important, though not yet evidence that T-Mobile US has become a sustainable and profitable business for the long term.
One of the nasty implications of protracted price and marketing wars is that financially-weaker service providers often find they ultimately cannot sustain the losses. And that is what observers will be watching for, in the case of T-Mobile US.
Edited by
Cassandra Tucker