T-Mobile, MetroPCS Claim Some Q3 Losses Stem From Proposed Merger

T-Mobile USA and MetroPCS believe some losses in Q3 resulted from their anticipated merger. T-Mobile said Thursday that the deal drove it into a net loss in Q3, while MetroPCS said it was losing prepaid customers to T-Mobile. No. 4 national carrier T-Mobile saw a net gain of 365,000 prepaid customers during Q3, which came at the expense of MetroPCS, MetroPCS Chief Financial Officer Braxton Carter said Thursday during an investor conference. T-Mobile owner Deutsche Telekom inked a deal in October to join MetroPCS with T-Mobile. The deal would give MetroPCS shareholders $1.5 billion in cash and 26 percent ownership of the combined carrier (CD Oct 4 p1). T-Mobile blamed its overall net loss of $7.8 billion for the quarter on the merger, saying Thursday in an earnings report that the figure included an $8.1 billion “goodwill” non-cash impairment charge related to the deal (http://xrl.us/bnyoqp). The carrier posted a $332 million net profit a year ago.

T-Mobile’s net customer adds rose slightly year-over-year in Q3. It said in an earnings report Thursday that it added 160,000 net subscribers; the carrier added a net 126,000 subscribers during the same period last year. That figure is an improvement from Q2, when it said it lost 205,000 net subscribers. T-Mobile lost 492,000 of its branded postpaid subscribers, but said its prepaid customer adds and a net gain of 287,000 wholesale customers brought its total for the quarter back into positive territory. At the end of the quarter, T-Mobile said it had 33.3 million total subscribers.

T-Mobile believes the merger with MetroPCS will help it accelerate its network modernization and expansion plan, T-Mobile CEO John Legere said in a statement. “With MetroPCS, we aim to become the industry’s leading value carrier -- for both prepaid and contract service offerings -- with the scale, spectrum and financial resources to aggressively compete with the other national carriers” (http://xrl.us/bnyosr).

The T-Mobile/MetroPCS merger will not be the end of the MetroPCS brand -- it will allow the brand to expand nationwide, Carter said at the investor conference. The combined carrier will offer a wide range of value-based products and services, with MetroPCS being able to bring its prepaid flat-rate model to Minneapolis, New Orleans and other “major markets that are underserved,” he said. MetroPCS has focused on getting its customers to join its LTE network, which it anticipates will expand beyond its current 1.25 million subscribers, Carter said. “We are seeing very rapid uptake to LTE.”