T-Mobile US has posted revenue of $10.2 billion (+10 percent), service revenue of $7.4 billion (+8 percent), net income of $581 million (+158 percent) and adjusted EBITDA of $3 billion (+19 percent) in Q2 2017.

“We just delivered a quarter with record service revenue, record-low churn, strong net income and record Adjusted EBITDA – all while leading the industry in postpaid phone growth,” said John Legere, president and CEO of T-Mobile.

T-Mobile’s disciplined pricing strategies also contributed to EBITDA margin (non-adjusted) increasing 270 basis points year-to-year to 28.7 percent and postpaid phone ARPU remaining relatively flat (-0.2 percent) at $47.01 while competitors are generally facing steeper ARPU declines.

T-Mobile has become conservative in its pricing strategies and is instead emphasizing the value and unique experiences T-Mobile One provides rather than trying to undercut competitors, according to Steve Vachon, analyst at TBR.

T-Mobile network focus

In light of T-Mobile’s current competitive pressures maintaining optimal network coverage is essential as customers have numerous low-cost options they can switch to should their T-Mobile coverage quality lapse, according to TBR.

T-Mobile will roll out sites in August as part of the utilization of 600MHz spectrum. T-Mobile said at least 10MHz covering more than 1.2 million square miles of 600 MHz spectrum will be ready to deploy in 2017.

“We will use a portion of our 600MHz spectrum holdings to deploy America’s first nationwide 5G network in the 2019 / 2020 time frame. 700 MHz deployment essentially complete and now live in 575 markets,” said Neville Ray, CTO of T-Mobile US.

T-Mobile will be expanding 4G LTE coverage to 321 million people by the end of 2017 from 315 million people.

Investment in expanding and improving network will enable T-Mobile to grow distribution footprint by 30 to 40 million POPs by year-end 2017.

T-Mobile plans to open 3,000 stores in 2017, including 1,500 T-Mobile stores and 1,500 MetroPCS stores.

T-Mobile has already opened more than 1,000 T-Mobile stores compared to almost 400 in the whole of 2016, and opened 1,100 MetroPCS stores. The company will have 17,000 branded locations across the country by the end of 2017.

T-Mobile customer additions

T-Mobile added 1.3 million subscribers, bringing total customer base to 69.6 million. Q2 2017 marks 17 straight quarters in which T-Mobile generated more than 1 million total net customer additions. It achieved record-low branded postpaid phone churn of 1.10 percent – down 17 bps y-o-y and 8 bps q-o-q.

TBR said T-Mobile’s postpaid strategies are paying dividends as the company boosted postpaid phone net additions to 786,000 in 2Q17, compared to 646,000 in 2Q16, despite competition from Sprint’s Unlimited Freedom promotions and Verizon’s and AT&T’s new unlimited data plans.

Better guidance

T-Mobile expects to add 3 million – 3.6 million branded postpaid net customer additions. The telecom operator is targeting Adjusted EBITDA of $10.5 – $10.9 billion from the earlier estimate of $10.4 – $10.8 billion, which includes leasing revenues of $0.85 – $0.95 billion, an increase from $0.8 – $0.9 billion.

Competition

T-Mobile’s pricing tactics are facing pressure within the prepaid space. Competition from Boost Mobile’s Project Switch promotion, which focused on undercutting MetroPCS, contributed to T-Mobile’s prepaid net additions decelerating to 94,000, a significant drop from 476,000 in 2Q16.

T-Mobile will also face heightened competition in the prepaid market in 2H17 from the recently revamped Virgin Mobile brand, which is featuring an unlimited data plan for $1 for a full year to iPhone purchasers.

Sprint now has a clear postpaid pricing advantage over its Tier 1 competitors and Verizon’s unlimited data rates are currently more on par with T-Mobile One Plus.

Image: T-Mobile CEO John Legere, center, along with COO Mike Sievert, left, and CFO Braxton Carter.