T-Mobile dodges inflation hit as cheaper plans power subscriber growth

A T-Mobile logo is advertised on a building sign in Los Angeles, California, U.S., May 11, 2017. REUTERS/Mike Blake/File Photo

July 27 (Reuters) – T-Mobile US Inc (TMUS.O) raised subscriber addition forecast for the second time this year as its strategy of selling relatively cheaper plans helped the carrier attract more price-conscious U.S. customers than its rivals AT&T and Verizon.

Shares of T-Mobile rose as much as 4.4% on Wednesday as the company’s results marked a bright spot in the hotly contested U.S. telecom market where the other two rivals have warned that users were feeling the heat of rising cost of living.

“We’re standing by our commitment to customers and those who switched to T-Mobile that we won’t raise the price of their rate plans,” Chief Executive Mike Sievert said in a conference call.

The company does not expect “significant delays” in bill payments this year, a pain point for AT&T Inc (T.N) that raised prices in June to offset a surge in costs.

T-Mobile’s low-price strategy is also a fallout of one the main arguments for its merger with Sprint when they sought regulatory approval in 2020.

“Going into the second half, the company looks well-positioned to continue to grab share in wireless as Verizon continues to bleed customers,” Scotiabank analysts said.

T-Mobile added 723,000 subscribers in the second quarter ended June 30, much above FactSet estimates of 573,100, also benefiting from an aggressive scale up in its 5G products.

The company expects to add between 6 million and 6.3 million net monthly-bill paying subscribers in 2022, up from a prior forecast of 5.3 million to 5.8 million.

It earned 43 cents per share excluding items in the second quarter, ahead of expectations of 25 cents, according to Refinitiv data. Revenue came in at $19.7 billion, missing estimates of $20.1 billion.

T-Mobile shares were at near one-year high of $140.2, adding to its 15.5% gains so far this year.

Reporting by Richard Rohan Francis, Eva Mathews and Niket Nishant in Bengaluru; Editing by Arun Koyyur

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