What's Been Lifting T-Mobile Stock Price High

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Feb 25, 2015
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America’s fourth largest wireless carrier T-Mobile (TMUS, Financial) came out with fiscal 2014 fourth quarter and full year numbers on Thursday, February 19. The telecom player has been experiencing a great year and the final numbers vouched for that. T-Mobile’s growth momentum increased as subscribers continued to choose its services over competitors.

The stock was up more than 3.5%, compared to its previous close, and as of this writing is trading at $32.04, the highest in the past six months and much close to its 52-week high of $35.50. So what pushed up the stock price this high? Let’s take a look.

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Source: Yahoo Finance

Financial perfromance
First, let’s talk about the fourth quarter performance.

For the three months period, the carrier posted consolidated revenues of $8.15 billion, up 19.3% from prior year’s $6.83 billion, and 10.9% from previous quarter’s $7.35 billion. Operating income improved and reached $433 million compared to third quarter’s $49 million and last year's fourth quarter of $139 million.

All of this boiled down to the fact that the carrier was able to post net profits worth $101 million, compared to the $20 million last year and loss of $94 million in the sequentially previous quarter. The diluted earnings per share came to $0.12, much above analyst expectations of $0.09 a share.

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Source: T-Mobile

Now, turning to the full year performance, consolidated revenues came to $29.56 billion, up 21.0% from 2013’s $24.42 billion, and operating income improved from previous year’s $996 million to $1.42 billion. All this trickled down to the bottom line that came to an earnings of $0.30 a share. All in all, T-Mobile had a great year as net income surged to $247 million--$0.30 a share, compared to the previous year’s $35 million--$0.05 a share.

Subscriber related digits
The following table shows the company’s performance related to subscriber additions.

Ă‚ Q4 2014 FY 2014
total net customer additions 2.1 million 8.3 million
branded postpaid net customer additions 1.3 million 4.9 million
branded postpaid phone net customer additions 1.0 million 4.0 million

Source: T-Mobile

For the fourth quarter, T-Mobile added 2.1 million net customers, making this the seventh consecutive quarter of reporting more than 1 million net customer additions. For the year, net customer additions came to 8.3 million, up 89% from the prior year's period. On the pre-paid front, branded net customer addition during the fourth quarter came to 266,000, again suggesting improvement on the back of continued strength of the MetroPCS brand.

During the earnings call, CEO John J. Legere mentioned, “Now we are number one in the prepaid segment, with over 16.3 million customers. We added 1.2 million customers for the full year; again, the most in the industry and as much as 14 times our nearest competitors. Much of this is fueled by the rapid expansion of our MetroPCS brand, which is now operating in 55 markets, up from the 15 when we closed the transaction.”

Competition
Apart from all this, during the last quarter of the year, T-Mobile enjoyed great porting ratios of 1.4 versus Verizon (VZ, Financial), 1.8 versus AT&T (T, Financial) and 2.2 versus Sprint (S, Financial). That’s a great development since enjoying such superior porting ratio against the bigger three peers is a matter of pride. AT&T and Verizon added almost similar numbers of new subscribers, but fell much behind T-Mobile when it came to postpaid wins. Compared to the other three, T-Mobile has been providing better service to its customers.

Today, data usage beats phone calls and text messaging requirements and this makes it very important for carriers to offer the best in-class data connection speeds. That’s exactly what T-Mobile is offering.

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Source: T-Mobile

A price war is currently going on among the four largest carriers and analysts and industry experts believe this will continue throughout this year. As T-Mobile competes closely with Sprint to steal the title of the third largest carrier, these two will continue to engage in aggressive promotions to attract customers from the two biggest players. To bring home the discussion, great promotions, better customer addition numbers, fantastic financial performance and bring upside potential are basically driving the T-Mobile stock price high.