T-Mobile expects to add 3 million to 3.6 million customers this year, up from an April forecast of 2.8 million to 3.5 million, the Bellevue, Washington-based carrier said in a statement Wednesday. The company raised its profit outlook for 2017, suggesting that promotions, price cuts and giveaways needed to attract new customers aren’t hurting the bottom line.
The results show T-Mobile emerging as a winner in an industry price war that has every major competitor offering phone discounts and unlimited data plans. The company’s ability to take market share from rivals has put it at the center of consolidation talks, including preliminary discussions with Sprint.
“While we continue to believe the stock will be driven by M&A-related stories and events that add near-term risk, the company is showing it can continue to be successful on a standalone basis while it waits to see what ultimately happens,” Colby Synesael, an analyst at Cowen & Co., wrote in a note Thursday.
In trading Thursday, T-Mobile US shares dropped 85 cents, or 1.4 percent, to $61.12. Deutsche Telekom, the German telecom giant that owns about 64 percent of T-Mobile, rose 1 percent in Frankfurt. The Bonn-based company will report second-quarter earnings on Aug. 3.
T-Mobile signed 817,000 new customers in the second quarter, more than the 731,250 analysts were expecting. Earnings more than doubled to 67 cents a share, shattering the 36-cent average estimate of analysts.
Even with the higher forecast, the company is unlikely to match its 4.1 million subscriber additions from 2016. Sprint, which trails T-Mobile in wireless customers, has introduced even more aggressive promotions, including a full year of free, unlimited data. Bigger rivals AT&T and Verizon have followed T-Mobile in offering unlimited data plans.
The pace of new customers coming in compared with those going out, or porting ratio, has slowed to 1.38-to-1 from 1.43-to-1 a year earlier. That rate is more than 1.3 so far this quarter, Chief Executive Officer John Legere said on an earnings call.
“I remember way back when we were at 0.3, and at one point at 3.3. Porting is a long-term game, but anything over 1 means you are winning. I’m happy with the porting numbers,” Legere said in an interview Wednesday.
Legere declined to comment on whether T-Mobile is in deal talks with any specific companies.
T-Mobile and Sprint have both said that a merger would help them better compete with AT&T and Verizon in offering the next generation of wireless-data services. But discussions between those two companies have been on hold while Sprint explores potential wireless partnerships with Comcast and Charter Communications.
T-Mobile’s average prices for phone service slipped slightly from a year ago, with new services making up for some of the discounts. Phone customers paid $47.01, down 10 cents from a year earlier.