T-Mobile Stock Falls As Earnings Top Views But AT&T Beats In Subscriber Adds

T-Mobile US (TMUS) reported June-quarter earnings and revenue that topped analyst estimates, but the wireless service provider added fewer postpaid phone subscribers than rival AT&T (T). T-Mobile stock dropped in early trading Friday on the news.


Controlled by Deutsche Telekom (DTEGY), T-Mobile reported second-quarter earnings late Thursday. The wireless firm said second-quarter adjusted earnings soared by 765% to 78 cents per share from a year earlier.

In the T-Mobile earnings report, the company said revenue rose 13% to $20 billion, boosted by its merger with Sprint.

Analysts expected T-Mobile to report adjusted earnings of 53 cents a share on revenue of $19.37 billion. In the year-earlier period, T-Mobile earned 9 cents per share on revenue of $17.7 billion.

T-Mobile said it added 627,000 postpaid phone subscribers vs. 253,000 a year earlier. Analysts had estimated 595,000 postpaid phone subscriber additions. But AT&T on July 22 said it added 789,000 postpaid phone subscribers in the June quarter. T-Mobile has been the industry leader in postpaid phone subscriber additions for several years standing.

T-Mobile Stock: Can It Regain Title?

“Surprisingly, TMUS had fewer Q2 postpaid phone subscribers than AT&T, which hasn’t happened in a (years) but switching activity will likely pick up in the second half of the year,” Oppenheimer analyst Tim Horan said in a report to clients. “We think AT&T won’t pull back on its retention promotions and cable and Verizon (VZ) are likely to ramp also.”

T-Mobile, meanwhile, is expected to ramp up marketing on 5G wireless services.

MoffettNathanson analyst Craig Moffett thinks AT&T’s spot at the top will be short-lived.

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“AT&T has been much more promotional than T-Mobile, giving away free phones to keep subscribers from leaving. The promotional landscape is likely to be more balanced in the second half, simply because of the calendar, and that will make it much tougher for AT&T to sustain its recent momentum,” Moffett said in an email to IBD. “T-Mobile has already launched its back-to-school promotions, and before you know it we’ll be into Black Friday.”

He went on to say: “Remember, T-Mobile’s service is much cheaper than AT&T’s, and their network is now better than AT&T’s. Absent lopsided promotionality, it’s hard to see how T-Mobile doesn’t return to its longstanding position as the industry’s fastest grower.”

One Profit Measure Tops Estimates

For the quarter, T-Mobile said earnings before interest, taxes, depreciation and amortization, also known as EBITDA, came in at $6.9 billion versus estimates of $6.68 billion.

T-Mobile stock dipped 0.4%, closing at 144.02 on the stock market today. TMUS stock trades above a buy zone from a flat base entry point of 135.64.

“Investors were perhaps looking for a larger beat/raise, though the company is in a position to sustain industry leading growth with meaningful synergy-driven, free cash flow step-ups over the coming year,” Cowen analyst Colby Synesael said in his note to clients.

One-third of Sprint customers have been moved to the T-Mobile network, the company said.

T-Mobile stock holds a Relative Strength Rating of 69 out of a best-possible 99.

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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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View more information: https://www.investors.com/news/technology/t-mobile-stock-edges-up-as-earnings-revenue-subscribers-top-views/

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