T-Mobile’s revenue growth
T-Mobile (TMUS) generated total revenues of $10.6 billion in the second quarter of 2018, which missed analysts’ expectation of $10.66 billion by 0.8%. Despite the miss, its top line grew 4% YoY (year-over-year) from revenues of $10.2 billion in Q2 2017. The company’s revenue growth trend is fueled by higher service revenues as well as growth in branded postpaid and branded prepaid revenues.
Growing service revenue
T-Mobile has delivered YoY growth in service revenues for the past 17 quarters. In the second quarter, it posted strong ~6.5% growth in service revenues, from $7.4 billion in Q2 2017 to $7.9 billion in Q2 2018. Its service revenues were primarily driven by its strong customer base and the success of its MetroPCS and Un-carrier plan initiatives.
In comparison, rival Sprint’s (S) wireless service revenue grew sequentially in the fiscal first quarter of 2018 for the first time in more than four years. Verizon’s (VZ) wireless service revenues in Q2 2018 grew 2.5% YoY, excluding the impact of the revenue recognition standard. AT&T (T) also posted an increase in its wireless service revenues in the second quarter on a comparable basis.
T-Mobile’s Un-carrier initiative also helped growth in its postpaid phone net additions, both sequentially and YoY. It added 686,000 net postpaid phone customers in the second quarter, which was higher than the combination of postpaid phone net additions of Verizon, AT&T, and Sprint in their quarters that ended on June 30. Verizon added 531,000 customers, while AT&T and Sprint added 46,000 and 87,000 customers, respectively.