T-Mobile US, a leading player in the telecommunications sector, made headlines on Wednesday by revising its projections for postpaid customer additions in 2024, following impressive second-quarter earnings that exceeded market anticipations. The company reported a net income of $2.49 per share for the June quarter, up significantly from $1.86 per share a year earlier.
Analysts surveyed by Capital IQ had forecasted earnings of $2.29, based on estimates from five industry experts. Additionally, T-Mobile's revenue surged to $19.77 billion, rising from $19.2 billion, which surpassed Wall Street's expectations of $19.57 billion. Total service revenue also demonstrated robust growth, increasing by 4.4% year over year to reach $16.43 billion, buoyed by a 6.9% rise in postpaid service revenue, which reached $12.9 billion.
Chief Executive Mike Sievert commented on the company’s performance, stating, "Our continued focus on delivering customers more value and a superior network experience enabled us to outperform our peers in the marketplace and translated into outsized financial growth." This positive outlook was reflected in the market as T-Mobile's shares rose by 2.6% in premarket trading on Wednesday.
During the quarter, T-Mobile successfully added 1.3 million postpaid customers, which included 777,000 new phone subscribers. The company’s strategy in postpaid account additions has proven effective, with an increase to 301,000 new accounts compared to 299,000 in the same quarter last year. Notably, the postpaid phone churn rate, representing the percentage of customers who discontinue services, stood at 0.80%, a slight increase from 0.77% in the same quarter of the previous year.
In the prepaid segment, T-Mobile recorded a total of 179,000 new customer additions, marking an increase of 55,000 compared to last year. For its high-speed internet service, the company added 406,000 customers on a net basis, although this was a decrease from the 509,000 additions reported during the equivalent period last year.
Looking ahead, T-Mobile has now set expectations for postpaid net customer additions to range between 5.4 million and 5.7 million for the year 2024, which is an upgrade from the previous guidance that estimated additions between 5.2 million and 5.6 million. Chief Financial Officer Peter Osvaldik elaborated during an earnings call about the company’s forecasts, stating, "We now expect the total postpaid phone net customer additions component to be approximately half of our total postpaid additions, up from our expectations last quarter.
And as part of that, we anticipate normal seasonal postpaid phone churn trends in the second half, similar to what we observed a year ago." Moreover, T-Mobile refined its full-year 2024 guidance for core adjusted earnings before interest, taxes, depreciation, and amortization to a range of $31.5 billion to $31.8 billion, an update from the prior outlook of $31.4 billion to $31.9 billion.
Capital expenditures are predicted to be between $8.7 billion and $9.1 billion, which is also a revision from the previous forecast of $8.6 billion to $9.4 billion. In summary, T-Mobile US's performance in the second quarter of 2024 showcases notable growth and a strong market position, leading to revised optimistic projections for customer additions and financial stability in the coming year..