Why T-Mobile’s Porting Ratios Continue to Improve

Let’s look now at T-Mobile’s (TMUS) customer retention metric, or churn rate. Its postpaid phone churn rate continued to decline YoY (year-over-year) during 4Q17 to 1.2%, which was lower than the comparable figure of 1.3% in 4Q16.

During the Morgan Stanley Technology, Media, and Telecom Conference on February 28, 2018, Braxton Carter, T-Mobile’s chief financial officer, talked about T-Mobile’s porting ratios. He said that quarter-to-date, the porting ratio is 1.7, up from 1.68 in 4Q17. He added that it reflects the strength of the T-Mobile brand and its product offering.

The lower churn helps telecom (telecommunications) companies save on acquisition costs related to acquiring a subscriber, which, in turn, helps them expand their operating margins.

In 4Q17, among the top four major US wireless service carriers, Verizon (VZ) continued to have the best postpaid phone churn rate of 0.77%. AT&T (T) had a postpaid phone churn rate of 0.89%. Sprint (S) reported a postpaid phone churn rate of 1.7% in fiscal 3Q17, which ended in December 2017.