T-Mobile Q2 profit jumps as customer growth pops again

More consumers signed up for T-Mobile CEO John Legere's Uncarrier mobile revolution as growth once again exceeded Wall Street's second-quarter expectations.

The wireless carrier swung to a second-quarter profit of $391 million, or 48 cents a share, helped by a 90-cent gain from a spectrum licensing deal with Verizon Wireless. Excluding the item, T-Mobile would have posted a loss. Revenue rose 15.3 percent to $7.19 billion. Wall Street forecast a profit of 8 cents a share on revenue of $7.04 billion.

T-Mobile shares reacted modestly to the news, but jumped up 5 percent to $32.52 on a report that French telecommunications provider Iliad is attempting to buy T-Mobile.

T-Mobile has been solely focused on customer growth -- often to the detriment of its bottom line. The company posted $1.45 billion on an adjusted earnings before interest, taxes, depreciation, and amortization basis, in line with Wall Street's forecast. Its aggressive moves, which the company makes assuming that the new customers would eventually pay off with more revenue and profit, have shaken up the wireless industry, forcing its larger rivals to respond.

"We have completely reversed T-Mobile's trajectory and started a revolution that is changing the rules in wireless," Legere said in a statement.

From a subscriber growth perspective, T-Mobile virtually lapped the competition in the first quarter, adding more so-called post-paid subscribers -- or customers who pay at the end of the month instead of pre-paying for service -- than the rest of the national carriers. But the second quarter saw the competition step up, with heated rival AT&T particularly benefiting from the same business model.

In the second quarter, T-Mobile added 1.5 million net new customers. That includes 908,000 T-Mobile branded post-paid customers, with 579,000 phone customers helped by 329,000 tablet customers. It added 1.1 million customers in the year-earlier period.

Wall Street had expected T-Mobile to add 700,000 net new branded customers.

As a result of the continued growth, T-Mobile raised its target for new post-paid subscriber additions to 3 million to 3.5 million, up from a prior target of 2.8 million to 3.3 million.

"The John Legere train keeps rolling along while his detractors continue to wait for a derailment," said Walter Piecyk, an analyst for BTIG Research.

As the No. 4 carrier in the nation by subscriber base, T-Mobile has been quick to offer new programs and promotions. On Monday, T-Mobile introduced a promotion for a four-line, 10 GB family plan for $100 a month, $60 less than the AT&T and Verizon equivalent. The promotion, which began Wednesday and is timed for the back-to-school season, doesn't have an effect on the recently reported results.

"Not to be cocky, but we are the competitive environment," Legere said in a conference call with analysts on Thursday. "Our moves are not based on reactions to anybody."

T-Mobile likely took most of its market share from Sprint, which lost 646,000 phone customers, but overall lost only 220,000 net customers due to gains in its tablet business. Both AT&T and Verizon Wireless reported a rebound with solid customer growth in the period, with AT&T in particular adding 707,000 new smartphone customers.

T-Mobile also said it sold 6.2 million smartphones in the quarter, making up 93 percent of the phones sold.

Updated at 6:35 am PT: To include executive comments and background.