T-Mobile Misses Subscriber Growth Targets Due to Tough Competition

• Customer churn rate increased to 1.02% from 0.92% year-over-year, indicating higher customer turnover despite T-Mobile adding the most subscribers among the big three U.S. carriers
• Total revenue of $24.33 billion exceeded estimates of $24.11 billion, boosted by 60% of new accounts choosing premium plans bundled with Netflix and Hulu subscriptions
• T-Mobile's finance chief attributed the competitive pressure to a 'principal competitor' aggressively pursuing device-centric promotions to drive postpaid phone growth during the holiday quarter

T-Mobile Misses Subscriber Growth Targets Amid Intensified Competition

T-Mobile fell short of quarterly subscriber growth expectations despite adding the most customers among the three major U.S. wireless carriers. The company added 962,000 postpaid phone customers in Q4, missing analyst estimates of 981,330 additions.

Key Financial Metrics:

• Total revenue: $24.33 billion (exceeding estimates of $24.11 billion)
• Customer churn rate: 1.02%, up from 0.92% year-over-year
• Annual adjusted free cash flow guidance: $18-18.7 billion (below analyst expectations of $18.9 billion)

Competitive Landscape:

T-Mobile's CFO Peter Osvaldik attributed the shortfall to "heightened device-centric competitiveness" from a principal competitor during the critical October-December holiday shopping period, when carriers typically offer aggressive Black Friday and Cyber Monday promotions.

Strategic Highlights:

Revenue performance was bolstered by strong demand for premium plans bundling Netflix and Hulu subscriptions, with 60% of new customer accounts selecting these higher-tier offerings. This shift toward premium services helped offset subscriber growth challenges.

Future Outlook:

The company's free cash flow guidance was impacted by higher integration costs related to its ongoing merger with UScellular. Despite the subscriber miss, T-Mobile maintained its position as the leader in customer additions among major U.S. carriers.

Market Implications:

The results highlight intensifying competition in the wireless sector, particularly around promotional periods. Investors should monitor whether premium plan adoption can sustain revenue growth amid pricing pressures and elevated customer churn rates in subsequent quarters.