A T-Mobile logo is advertised on a building sign in Los Angeles, California, U.S.Mike Blake/Reuters
T-Mobile US Inc raised its subscriber growth forecast for the second time this year and exceeded quarterly profit expectations on Wednesday, as its relatively cheaper plans lured customers reeling from decades-high inflation.
Shares rose 3% in premarket trading as the carrier’s results marked a bright spot in the U.S. telecom market in which Verizon Communications Inc and AT&T Inc cautioned that subscribers were feeling the heat of rising cost of living.
Quarterly reports from U.S. telecom companies have added to growing evidence of some pullback in consumer spending, with weakness seen from consumers hard hit by record fuel and food prices.
Unlike its rivals, T-Mobile’s decision not to raise prices for its wireless plans has helped it add more customers in a price-conscious market.
Promise of low prices was one of the main arguments for T-Mobile and Sprint when they sought regulators’ approval for their merger in 2020.
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 suite of 5G products.
The carrier expects annual free cash flow including merger related costs to be between $7.3 billion and $7.6 billion compared with the previous forecast of $7.2 billion-$7.6 billion.
Excluding items, the company earned 43 cents per share in the second quarter, above expectations of 25 cents per share, according to Refinitiv data.
T-Mobile generated revenue of $19.7 billion, missing estimates of $20.1 billion.
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