In the previous part of this series, we saw that Wall Street expects T-Mobile (TMUS) to have robust revenue growth in 2Q15. We also learned that in 1Q15, T-Mobile witnessed the highest year-over-year revenue growth compared to the wireless segments of the three largest US carriers.
Verizon (VZ), AT&T (T), and Sprint (S) are the top three wireless carriers in terms of postpaid subscriber base in the United States. T-Mobile had the fourth-largest postpaid base in the United States as of the end of 1Q15. The carrier’s solid revenue growth was driven by robust growth in its postpaid subscriber base.
T-Mobile’s postpaid subscriber growth rates are significantly higher than any of the top three US wireless carriers. As you can see in the above graph, T-Mobile’s postpaid subscribers grew ~19.8% year-over-year to ~28.3 million at the end of 1Q15.
Verizon, the US carrier with the largest postpaid base, witnessed ~5.5% year-over-year growth in this operating metric. AT&T reported ~3.9% year-over-year growth in the postpaid subscriber base in 1Q15. Sprint’s postpaid subscriber base continued to fall year-over-year during the same period.
T-Mobile subscriber base closing in on third place
T-Mobile’s consistent sequential growth has helped it come very close to Sprint, the third-largest postpaid subscriber base in the United States. Sprint had ~29.7 million postpaid connections at the end of 1Q15.
Considering the growth momentum of the T-Mobile subscriber base and Sprint’s lackluster performance in attracting postpaid subscribers, T-Mobile may soon become the third-largest US wireless carrier by postpaid customers.
Instead of investing in T-Mobile stock, you may take a diversified exposure to the company by investing in the iShares U.S. Telecommunications ETF (IYZ). IYZ held ~5.6% of T-Mobile as of June 30, 2015.
You may also take an extremely diversified exposure to the company by investing in the iShares Russell 1000 Value ETF (IWD). The ETF held ~0.1% in T-Mobile at the end of June.