T-Mobile posts a net loss for third consecutive quarter amid a customer gains push

T-Mobile US Inc., which currently is the fourth-largest wireless carrier in the U.S., posted a net loss for a third straight quarter. The unsatisfactory result was based on the fact that subscriber gains, which are driven by the companys cheaper service plans, ended up generating higher costs for T-Mobile.

T-Mobile US Inc. made an official filing, revealing that its fourth-quarter net loss is estimated to 20 million dollars. If interest expenses, which amount to 234 million dollars, as well as taxes, depreciation and amortization are left out, the companys profit would have increased by 18% to reach 1.24 billion dollars. The carriers shares have decreased by 9.4% this year. The 2013 net income of T-Mobile was estimated to 35 million dollars. The company posted a loss in the second quarter, which amounted to 16 million dollars, and a third-quarter loss of 36 million dollars.

Currently, the company is putting efforts into attracting clients by using long-term contracts, discounted phones and international roaming rates. In January 2014 T-Mobile started offering as much as 450 dollars to people, who abandon its rivals such as AT&T Inc. and shift to the companys services. T-Mobile US Inc. added 869,000 customers on a monthly basis last quarter, surpassing the average of analysts estimates, which amounted to 791,000.

One of the analysts who work for MoffettNathanson LLC – Craig Moffett – said in an e-mailed statement, which was cited by Bloomberg: “T-Mobile is making money on each subscriber they acquire – it’s just nowhere near as much money as the incumbents are used to. The rest of the industry should be very afraid.”

The average bill size of T-Mobile was reported to have decreased by about 2.9% and reached 50.70 dollars from the third-quarters estimate of 52.20 dollars. According to data compiled by Bloomberg, the average of the analysts estimates was of 51.06 dollars.

T-Mobiles Chief Executive Officer Mr. Braxton Carter said in a phone interview, cited by Bloomberg: “Our business is a business that has acquisition costs of customers. If we had not grown during 2013 you would have seen a massive increase in the profitability, in the Ebitda and the net income of our business.”

T-Mobile US Inc. fell by 5.69% on Tuesday in New York to close at $30.47, marking a one-year change of +139.68% and trimming the companys market value to $24.45 billion. According to CNN Money, the 15 analysts offering 12-month price forecasts for T-Mobile US Inc. have a median target of 35.00, with a high estimate of 39.00 and a low estimate of 12.00. The median estimate represents a +14.87% increase from the last price of 30.47.