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T-Mobile shows that being the un-carrier doesn't have to mean being unprofitable

The company has not only doubled its customer base since launching its un-carrier effort, it has started to make some money.

Asa Mathat

In delivering a profitable first quarter, T-Mobile US went a long way to showing skeptics that it can not only grow its business, but actually make some money, too.

The company not only gained 2.2 million more customers and boosted its revenue in the first three months of 2016, it generated more than $1 billion in cash from operations and posted a 10-cent-per-share profit, even excluding a spectrum-related gain.

“Most of the critics who are left are called the CFOs of our competitors who are forced to come up with something to cast a doubt on our results,” Operating chief Mike Sievert told Re/code.

All told, T-Mobile has more than 65 million customers now, more than twice what it had a few years back before CEO John Legere and his team did away with annual contracts and embarked on the bold, brash un-carrier marketing campaign.

Sievert said the company still sees more opportunity to change how phones are sold and customers receive support. And a new “un-carrier” initiative is coming up soon, he said. It’s number 11, so you can practically see the heavy metal-themed marketing spiel now.

T-Mobile will have to keep its foot on the gas as rival Sprint is becoming increasingly aggressive in trying to woo customers, as are larger rivals AT&T and Verizon. Jackdaw Research analyst Jan Dawson notes that although T-Mobile continues to add customers faster than rivals, it is gaining them at a slower pace than it had done in recent years.

Jackdaw Research

The company is also working to make sure its network can keep pace with both more customers and an increasing amount of video being streamed thanks to the company’s Binge On option, which lets customers view unlimited video from various services as long as they are okay with slightly lower quality. Technology chief Neville Ray said T-Mobile is continuing to add recently acquired low-bandwidth spectrum to its network, a move that will help the company in both rural areas and inside buildings in cities.

In addition to its spectrum purchases, T-Mobile has also said it will be an aggressive bidder in the Federal Communication Commission’s big spectrum auction, which is just getting under way.

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