T-Mobile Expects Slower Growth, Explaining Push Into Video

Updated on
  • No. 3 wireless carrier sees up to 3 million new users in 2018
  • Launching ‘T-Mobile TV’ this year as next phase of video plan
John Legere, T-Mobile US Inc. president and chief executive officer, says rivals are "dumb and dumber."

T-Mobile US Inc. investors now know why it’s buying an online TV service -- the No. 3 U.S. wireless carrier sees slower times ahead for its industry-leading subscriber growth.

T-Mobile on Thursday forecast 2 million to 3 million new branded post-paid customers in 2018, fewer than the 3.6 million subscribers added in 2017 and a fourth straight year of slower growth. It also forecast full-year adjusted earnings that are slightly below analysts’ expectations.


The annual pace of T-Mobile's subscriber growth is slowing

Source: company filings

While T-Mobile said last month it signed about 1.1 million new customers in the fourth quarter, the most among its peers in user growth, the pace of expansion continues to slow even with giveaways like free Netflix accounts. That’s led the company to explore markets like online TV.

Last month, T-Mobile paid $325 million for Layer3 TV Inc., a streaming-video service that’s already available in a handful of cities including Washington and Chicago, according to a filing Thursday. The move into live streaming video will pit T-Mobile against online TV rivals such as Dish Network Corp.’s Sling TV and AT&T Inc.’s DirecTV Now. The company, in an investor factbook, said it plans to announce the next phase of its video strategy with the launch of “T-Mobile TV” at some point this year.

T-Mobile said in its financial statement that it sees full-year adjusted earnings before interest, taxes, depreciation and amortization of $11.3 billion to $11.7 billion. Analysts had expected an average of about $11.9 billion.

T-Mobile fell 1.2 percent to $61.32 as of 10:25 a.m. in New York. On a conference call Thursday, Chief Financial Officer Braxton Carter said majority owner Deutsche Telekom AG will start buying shares sometime soon, without providing additional details. Carter had said in December that Deutsche Telekom could add as much as 2 percent to its stake.

(Updates with shares, Deutsche Telekom plans to increase stake in final paragraph.)
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