3 Things T-Mobile US Inc (TMUS) Would Like To Do Before Next Quarter?
T-Mobile US Inc (NYSE:TMUS) delivered numbers below expectations for the third quarter. That was primarily due to bad debt and lower ARPU though it recorded significant subscribers’ growth. Also, the company has been promoting a specific scheme thus dragging down its ARPU, as well as, its top line. The company did well to retain its third position, which it grabbed from Sprint Corp (NYSE:S) at the end of the second quarter. However, the company would like to set at least three things in place before the fourth quarter. The telecom service provider continued to witness considerable momentum in its tactics due to its pricing, as well as, enhanced plan offerings.
Needs To Increase ARPU and Reduce Bad Debt
The first and foremost for T-Mobile US Inc (NYSE:TMUS) is to focus on average revenue per user (ARPU) since it was one of the disappointments in the third quarter results. ARPU witnessed a sequential drop, as well as, accelerated YOY drop. The stabilization of ARPU should happen in the fourth quarter. Of course, most of its rivals are suffering sharp declines. Therefore, it should not be a surprise that T-Mobile is pressured. However, there is an expectation that ARPU would return to some tiny growth in the fourth quarter. The company continued to grab the family plan customers in the postpaid section.
Another area of focus for T-Mobile US Inc (NYSE:TMUS) is to reduce its debt burden. In the third quarter, expenses towards bad debts advanced 26.9% to $198 million from $156 million in the preceding quarter. That was an unfavorable thing as far as investors were concerned. The increased debt expenditures could have been due to increased mix. That is by adding lower credit quality customers in the first quarter as some of them were delinquent on their bills. Aside from that, there were some seasonal factors in relation to the new smartphone launches like the iPhone 6S and 6S Plus. There is hope that the bad debt costs would stabilize in the fourth quarter. That would enable it to come back to the long-average next year.
Maintaining Customer Growth Rate
The second point is that T-Mobile US Inc (NYSE:TMUS) should be in a position to maintain its growth rate in respect of customer segment. According to Consumer Intelligence Research Partners (CIRP) analysis, the company had the best quarter along with Sprint Corp (NYSE:S). That was in respect of the consumer trends in mobile activations in the third quarter. The telecom service provider gained new customers to a greater extent than losing their current customers. The research firm said that T-Mobile outperformed the other three big carriers in the United States by adding a higher percentage of net customers while maintaining the customer losses at the same rate as its rivals.
The research firm indicated that T-Mobile US Inc (NYSE:TMUS) grew its customer base by 25% whereas its rivals grew at a much smaller rate. It was not the only quarter. For quite some quarters, the company has been recording significant growth in customer additions. Therefore, there is a hope that the company would maintain its customer addition growth in the fourth quarter also.
The third factor that the telecom service provider should focus is to enhance its network that witnessed a letdown. T-Mobile US Inc (NYSE:TMUS)’s CEO, John Legere, said that CellSpot, the first mini tower, would be available to enhance the network. The mini tower needs a power connection and a wired broadband Internet connectivity. It would be a backhaul to the company’s network, which was similar to that of a fiber-optic or wired connection.
The mini tower is meant to enhance the wireless coverage from indoor covering an area of 3,000 square feet on average. It would work with any 3G or 4G device. However, it would work only on the company’s network.
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