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T-Mobile cements its standing by adding 1.8M customers

The Uncarrier march continues to pick up steam, but the growth is coming at a cost as the wireless carrier posts another loss because of its aggressive promotions.

T-Mobile CEO John Legere at the last Uncarrier event in March. Sarah Tew/CNET

T-Mobile is almost certainly the nation's third-largest wireless carrier.

That's after the Bellevue, Wash.-based company on Tuesday posted first-quarter results that included adding 1.8 million customers in the period. The increase brought its total to 56.8 million, somewhat short of Wall Street estimates. In the previous quarter, rival Sprint had pegged its own number at 55.9 million versus T-Mobile's then 55 million, leading T-Mobile to accuse Sprint of .

Sprint dismissed the claim, noting that it hadn't changed its method of reporting in years. It also disputed the presumption that it had lost its No. 3 spot already.

"We are focused on long-term growth by offering customers value, providing a great experience and having a reliable and consistent network," said a Sprint spokesman. "Customers don't care who is three or four, still it is something that the media is going to focus on, but if it going to be written about it seems like it should be done without mixing facts with fiction and projections."

Given T-Mobile's growth relative to expectations for Sprint in the period, the carrier likely surpassed its rival Sprint reports its results on May 5.

T-Mobile's growth is all the more impressive considering the struggles that the biggest carriers face. Verizon Wireless last week reported disappointing subscriber growth, and while AT&T managed to reduce its rate of customer defections, its own subscriber growth is well short of the rate that T-Mobile is enjoying. The results are a testament to the effectiveness of T-Mobile's Uncarrier campaign -- a series of aggressive customer-friendly programs designed to entice consumers to switch over.

Drilling down beyond the total number, T-Mobile added 1.1 million customers with higher credit quality who pay at the end of the month. Those so-called post-paid subscribers are seen in the industry as the most lucrative type of consumers. The company's prepaid growth, however, fell well below expectations in a typically healthy period, a shortfall it attributed to increased competition and migration from prepaid to postpaid services.

As with previous quarters have shown, the Uncarrier programs come at a cost. The T-Mobile posted a loss of $77 million, or 8 cents a share, compared with a year-earlier loss of $151 million, 19 cents a share. Analysts, on average, forecast a loss of 16 cents share.

Revenue rose 13.1 percent to $7.8 billion, topping analysts' estimates of $7.72 billion.

T-Mobile has argued that the aggressive programs would hurt near-term earnings, but that the customer growth would sustain its profitability and revenue growth over the long term.

Another benefit is increased loyalty. T-Mobile saw its branded-smartphone turnover rate fall to 1.3 percent from 1.47 percent a year ago, although its prepaid turnover spiked.

Its latest Uncarrier moves came in mid-March, too late to affect results in the full first quarter. T-Mobile unveiled a set of simplified pricing plans for businesses that undercut rivals from AT&T and Verizon Wireless, and it said would buy out your smartphone payment plan or lease if you switch. The carrier also guarantees pricing for existing customers, allowing subscribers with temporary programs with extra data to keep their plans intact.

For 2015, T-Mobile said it expects its postpaid customer growth to be between 3 million and 3.5 million, an increase from a previous range of 2.2 million to 3.2 million. It expects full-year adjusted earnings before interest, taxes, depreciation and amortization of $6.8 billion to $7.2 billion.

Updated at 8:51 a.m. PT: To include a comment from Sprint.