T-Mobile (TMUS 61.97) has thrown down the gauntlet in the wireless services industry and it continues to show that it is up to the challenge of battling competitors such as Verizon (VZ), AT&T (T) and Sprint (S). Its second quarter results and guidance indicate as much.
After Wednesday's close, T-Mobile reported a 10.0% year-over-year increase in revenue of $10.21 billion and a 168% year-over-year increase in diluted earnings per share of $0.67.
The revenue and EPS results were comfortably ahead of analysts' average expectations and they were fed by strong customer growth and higher adjusted operating margins.
T-Mobile had 1.3 million total net customer additions in the second quarter, marking the 17th straight quarter it has exceeded 1.0 million net customer adds. The customer growth was accented by 817,000 total branded postpaid net additions, which T-Mobile believes will lead the industry for the sixth consecutive quarter.
Notably, branded postpaid phone churn was a record-low 1.10%, down 17 basis points year-over-year and eight basis points quarter-over-quarter.
The avant-garde carrier is increasing its guidance range for branded postpaid net customer additions for 2017 to 3.0 - 3.6 million from 2.8 - 3.5 million. It is also increasing its adjusted EBITDA target to $10.5 - $10.9 billion from $10.4 - $10.8 billion. The three-year compound annual growth rate for free cash flow from FY 2016 to FY 2019 was left unchanged at 45% to 48%.
In a reflection of its upbeat growth outlook, 3,000 new stores are planned for 2017, with 1,000 T-Mobile and 1,100 MetroPCS stores opened to year-to-date.
Shares of TMUS, which are up 7.8% year-to-date and up 39.1% over the last 52 weeks, are trading 3.2% higher in pre-market action.