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Looking into T-Mobile’s Growing Customer Base

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T-Mobile adds net customers

T-Mobile (TMUS) has been strengthening its customer base as of late. The telecom (telecommunications) company has added more than 5 million customers each year in the last four years. In the first quarter, T-Mobile’s net customer base increased by 1.4 million. Though its net customer additions were down from the 1.9 million customers it added in the previous quarter, they were higher than the 1.1 million it added year-over-year.

By the end of the first quarter, the company had a subscriber base of ~74 million. Notably, T-Mobile’s potential merger with Sprint (S) is expected to build a customer base of ~127 million and give stiff competition to the top two wireless carriers in the country, Verizon (VZ) and AT&T (T).

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Initiatives driving customer growth

The mobile carrier company has been banking on its Un-carrier measures, consumer-friendly data plans, and promotional offers that focus on customers. T-Mobile has launched 14 Un-carrier efforts since the initiative’s launch in September 2017 and has remained successful in attracting more customers than its competitors. Notably, customers have been shifting to T-Mobile driven by its Un-carrier benefits such as Netflix On Us—free access to Netflix’s (NFLX) streaming service—and simple rate plans, such as the T-Mobile ONE, which are inclusive of taxes and fees.

Also, the increased scale and resources of MetroPCS have helped the company to add more customers in the wireless space. T-Mobile for Business has also been growing continuously in the existing and Greenfield markets. Notably, the company was able to achieve its lowest postpaid phone churn rate of 1.1% in the first quarter driven by rising customer growth.

Positive impact of Un-carrier initiative

T-Mobile’s Un-carrier plans also pushed up its postpaid subscriber growth. Notably, postpaid customers are considered to be more profitable to mobile operators than prepaid customers.

In fact, in the first quarter, T-Mobile was able to add more postpaid phone net additions than the combined net additions of Verizon, Sprint, and AT&T in the same period. In the quarter, T-Mobile added 617,000 branded postpaid phone subscribers, while Verizon and Sprint reported postpaid phone net additions of 260,000 and 55,000, respectively, in their comparable reporting periods. AT&T lost 22,000 postpaid phone customers in the first quarter.

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