T-Mobile posted yet another quarter that showed it continues to perform at peak level. This was the first full quarter where the competition went big on unlimited offers, yet T-Mobile still expects to capture all of the industry postpaid phone growth.
Q2 2017 was a record-breaking quarter in a number of areas for T-Mobile. We delivered record service revenue, strong net income, record Adjusted EBITDA and record-low postpaid phone churn.
T-Mobile also added 1.3 million total customers, marking 17 straight quarters of adding more than 1 million every quarter. Customers are also staying longer, reflected in our record-low branded postpaid phone churn of 1.10% in Q2 2017.
Total net customer additions were 1.3 million in Q2 2017, bringing our total customer count to 69.6 million. Q2 2017 marks 17 straight quarters in which T-Mobile generated more than 1 million total net customer additions.
• Branded postpaid phone net customer additions were 786,000 in Q2 2017, driven by strong customer response to Un-carrier initiatives, including a best ever share of branded postpaid phone net additions from our business channel, @Work and a successful launch of our DIGITS product. Q2 2017 is expected to mark the 14th consecutive quarter that T-Mobile has led the industry in this category. Branded postpaid phone churn was a record low of 1.10% in Q2 2017, down 8 basis points from Q1 2017 and down 17 basis points from Q2 2016.
• Branded prepaid net customer additions were 94,000 in Q2 2017, down due to lower gross additions from increased competitive activity in the marketplace. MetroPCS continues to perform strongly, but we chose not to respond to irrational offers from some of our competitors during the second quarter. Branded prepaid churn was 3.91% in Q2 2017, down 10 basis points from Q1 2017 and flat compared to Q2 2016.
Service revenues increased 8% in Q2 2017 to a quarterly record-high of $7.4 billion. This is expected to mark the 13th quarter in a row that T-Mobile has led the industry in year-over-year service revenue percentage growth. Total revenues increased 10% in Q2 2017 to $10.2 billion. This is expected to mark the 16th time in the last 17 quarters that T-Mobile has led the industry in total revenue percentage growth.
• Branded prepaid ARPU was a record-high $38.65 in Q2 2017, up 2.1% from Q2 2016 primarily due to the continued growth of MetroPCS customers and a deliberate decision not to respond to irrational offers in the marketplace from some of our competitors.
• Net income increased 158% year-over-year in Q2 2017 to a strong $581 million. Net income as a percentage of service revenue was 8% in Q2 2017, up from 3% in Q2 2016.
Strong Network and Distribution Expansion
- 600MHz deployment activities are well underway with the first sites expected to light up in August. At least 10MHz covering more than 1.2M square miles of 600 MHz spectrum will be cleared and ready to deploy in 2017, with several compatible devices ready for the 2017 holiday season. 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.
- Expanding our 4G LTE coverage breadth to 315 million people and are targeting 321 million people by the end of 2017.
- Expanding and improving the network will enable T-Mobile to grow the distribution footprint by 30 to 40 million POPs by year-end 2017. The operator plans to open 3,000 stores in 2017, including 1,500 T-Mobile stores and 1,500 MetroPCS stores. To date, T-Mobile has opened more than 1,000 T-Mobile stores, in line with the original target for July and compared to almost 400 in the whole of 2016, and opened 1,100 MetroPCS stores. In total, the company expects to have 17,000 branded locations across the country by the end of 2017.