T-Mobile US swings to Q4 profit on 1.5m net adds

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Outspoken CEO John Legere blasts AT&T, Verizon for AWS-3 auction tactics.

T-Mobile US chief executive John Legere launched a fresh attack on market leaders AT&T and Verizon, despite his company’s impressive performance in the fourth quarter of 2014.

In an official blog post on Wednesday, Legere claimed that the recently-concluded AWS-3 spectrum auction “was a disaster for American wireless consumers” because of the vast sums that AT&T and Verizon spent on airwaves.

Indeed, AT&T emerged as the highest bidder in the Federal Communications Commission’s (FCC’s) latest auction, accounting for $18.2 billion of the $44.9 billion raised. TV and broadband provider Dish Network also spent big – $13.3 billion – while Verizon spent $10.4 billion. Meanwhile, T-Mobile US spent $1.8 billion while the country’s third-largest mobile operator Sprint did not take part at all.

“AT&T and Verizon showed that they can, and will, dig into their deep pockets to corner the market on available spectrum,” said Legere, noting that three companies alone spent $42 billion between them, winning 94% of the spectrum on the block.

With the FCC’s incentive auction due to take place next year, Legere called on the regulator to impose conditions that will promote competition.

He suggested that the auction be brought forward in order to curb the amount of time AT&T and Verizon have to raise money for more airwaves. He also said at least half of the available frequencies should be reserved for smaller players, and called for restrictions on spectrum trading.

“If the government wants a competitive wireless market, they need to establish auction rules to reflect that,” he said.

It is not all doom and gloom though, as T-Mobile on Thursday revealed that it swung to a fourth quarter net profit driven by branded net customer additions of 1.5 million.

The telco added 1 million postpaid and 266,000 prepaid branded phone subscribers in the three months to 31 December, giving it a branded customer base of 43.5 million, up from 37.4 million in Q4 2013.

T-Mobile’s overall customer base, including MVNO, M2M and mobile broadband customers, increased on-year to 55 million from 46.7 million.

Revenue surged 20.5% to $8.2 billion, while operating profit increased to $433 million from $139 million. Fourth quarter operating