By Drew FitzGerald
T-Mobile US Inc. said it vaulted ahead of rival AT&T Inc. in the race for wireless customers to become the country's second-largest cellphone carrier.
The Bellevue, Wash., company ended June with 98.3 million U.S. customers, excluding wholesale subscribers on other brands that use its network. AT&T reported 92.9 million prepaid and postpaid customers, a tally that didn't count wholesale accounts or connected devices such as Wi-Fi hotspots and car sensors. T-Mobile included non-phone gadgets like wireless hotspots in its reported customer base.
Despite the different reporting policies, T-Mobile was long expected to climb the wireless rankings after it closed its merger with rival Sprint in April. The merger effort prevailed after a more than two-year battle with regulators and antitrust enforcers that culminated in a federal antitrust trial brought by a coalition of state officials. The transaction created a larger mobile service provider with a market value topping $100 billion controlled by German parent company Deutsche Telekom AG.
"We're staring down Verizon with our sight set on the No. 1 spot," T-Mobile Chief Executive Mike Sievert said Thursday during a videoconference with financial analysts. Verizon Communications Inc. ended June with 119.9 million wireless connections, a figure that also counted smartwatches, tablets, and other machines aside from smartphones.
T-Mobile's second-quarter results showed it also weathered the coronavirus pandemic better than its competitors, adding 253,000 postpaid phone customers during the period. Investors place a higher value on postpaid customers -- who are billed for service after it is rendered -- than on prepaid plans subject to more customer switches.
Overall, T-Mobile reported a second-quarter profit of $110 million, down from $939 million a year earlier before it had acquired Sprint. The result included $798 million of pretax merger costs. Revenue jumped to $17.7 billion, up 61% from about $11 billion a year earlier, when T-Mobile was a stand-alone carrier.
Executives warned investors to expect higher-than-usual costs in the second half, including between $800 million and $1 billion in merger-related expenses. T-Mobile decommissioned the Sprint brand earlier this week and continues to close some of its former competitor's stores while it merges the two companies' networks, a multiyear process.
Write to Drew FitzGerald at email@example.com