T-Mobile Q2 earnings: Wireless carrier exceeds expectations, sees surge in customer growth.

Why T-Mobile’s Rapid Growth Could Be Great for Everybody’s Phone Bill  

Why T-Mobile’s Rapid Growth Could Be Great for Everybody’s Phone Bill  

Moneybox
A blog about business and economics.
July 30 2015 12:56 PM

T-Mobile Is Catching Up With Verizon, AT&T, and Sprint. That’s Great for Everybody. 

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Customers are about to get even happier about their phone plans.

Photo by John Moore/Getty Images

America’s major wireless carriers are at war with each other. A few years ago, consumers had no choice but to grudgingly turn out their pockets for mobile service that was often expensive yet mediocre—but recent industrywide network improvements have allowed wireless service to get better, cheaper, and much more competitive. Carriers are fighting one another to offer the best deals and most discounted plans. Though Verizon and AT&T are holding steady as the country’s largest carriers by subscriber numbers, they’re feeling some heat from other competitors in the market.

On Thursday, T-Mobile announced that its revenue rose an impressive 14 percent in the second quarter of this year, thanks in part to the addition of 2 million new subscribers. The company reported revenue of $8.2 billion, well over analysts’ expectations of $7.94 billion, and it also posted a profit of $361 million. It’s now added more than 1 million net total subscribers per quarter for nine quarters in a row. Many analysts predict that T-Mobile could very well surpass Sprint as the nation’s third-largest carrier, though we won’t know that for sure until Sprint reports its earnings next week.

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What is sure, though, is that T-Mobile’s earnings and growth aren’t accidental. In the last two years, the company has slashed prices and rolled out a campaign specifically targeting the weaknesses of its competitors. Earlier this summer, the company announced an enticing new program that allows customers to upgrade their smartphones multiple times a year. Then, it started letting customers use their phones in Canada and Mexico without incurring roaming fees. It introduced a family plan that gives each member 10 gigabytes of data. Just this week, it guaranteed a $15 monthly fee for iPhone 6 buyers who want to upgrade to a newer iPhone next year—and though this last announcement comes after the close of the company’s second quarter, it helps show just how much pressure T-Mobile is putting on its peers. And it might be working: Verizon’s customer growth, for example, is slowing.

But bad news for Verizon might be extremely good news for consumers. That’s because T-Mobile’s growth might spur the other three big players on the field—Verizon, AT&T, and Sprint—to offer even better plans to lure customers back. On Wednesday, T-Mobile CEO John Legere boasted that his company “continues to listen to customers and respond with moves that blow them away.” The question now is whether other carriers will seek to do the same.