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T-Mobile rides 'Uncarrier' wave as consumers flock to its service

The carrier is outpacing its national wireless rivals in subscriber growth. It also swings to a profit, but not by as much as Wall Street was expecting.

T-Mobile CEO John Legere at one of the company's "Uncarrier" events.
Sarah Tew/CNET

The momentum of T-Mobile can't be denied.

For months, the Bellevue, Washington, company has been gaining more mobile phone customers than its three rivals combined. It has struck a chord with consumers through pocketbook-friendly features under the "Uncarrier" banner, including monthly rollovers of unused data and free data roaming in Canada and Mexico. A dash of marketing flash and a pinch of profanity courtesy of CEO John Legere also helped turn heads.

That trend continued in the third quarter. The nation's third-largest wireless carrier said Tuesday that it added 2.3 million customers in the period. Out of that total, 843,000 opted to pay at the end of the month, and are a lucrative base referred to as postpaid customers.

By comparison, Verizon signed up little more than half that number of net new postpaid phone customers during the quarter, while AT&T lost such customers. Sprint hasn't reported yet, but would have to add close to three quarters of a million customers to keep T-Mobile from once again outstripping the trio of national carriers in terms of growth in the critical postpaid segment.

The two-and-a-half-year-old Uncarrier campaign is starting to pay off on the bottom line, too. T-Mobile swung to a profit for a second consecutive quarter, earning $138 million, or 15 cents a share, on revenue of $7.8 billion. Still, the profit was half of analyst forecasts.

The company said it expects to post positive earnings in the fourth quarter and for the full year.

T-Mobile customers apparently like the service. The turnover rate, which measures how many customers leave T-Mobile each quarter, fell to 1.46 percent from 1.64 percent a year ago.

The company ended the quarter on a high note, analysts believe, thanks to the debut of the iPhone 6S and iPhone 6S Plus, which came toward the end of the period.

As the last carrier to get the iPhone, T-Mobile has the smallest base of customers using Apple's iconic device. Legere said that preorders for the iPhone 6S and 6S Plus were up 30 percent from advance iPhone sales a year ago, when the iPhone 6 and 6 Plus debuted.

The carrier has also excelled in prepaid plans, which allow customers who typically have lower credit scores to pay at the beginning of each month. The company added 595,000 such customers in the period.