© Reuters. FILE PHOTO: The logo of T-Mobile Austria is seen outside of one of its shops in Vienna, Austria, February 25, 2016. REUTERS/Leonhard Foeger/File Photo
By Samrhitha A
(Reuters) -T-Mobile US raised the lower end of its annual free cash flow forecast on Wednesday as it beat estimates for quarterly profit and subscribers additions on the back of cheaper wireless plans.
The company has been a front-runner in subscriber additions with flexible plans such as “Go5G” and “Phone Freedom” as Americans look to cut costs amid fears of an economic slowdown.
T-Mobile now expects adjusted free cash flow for the year to be between $13.4 billion and $13.6 billion, compared with its prior forecast of $13.2 billion to $13.6 billion.
It has also been trying to attract AT&T (NYSE:) and Verizon (NYSE:) customers by absorbing some of the costs related to people exiting their three-year lock-in contracts with these companies.
T-Mobile added 850,000 postpaid phone customers in the third quarter, the highest among peers, beating FactSet estimates of 773,400 additions.
“T-Mobile continues to lead the way when it comes to customer growth. Our experts have highlighted that by the end of 2024, there will likely be 8.5-9 million connected device adds across the industry and T-Mobile is well positioned to capture the lion’s share of this growth,” Third Bridge analyst Jamie Lumley said.
It raised its full-year forecast for wireless subscriber net additions to between 5.7 million and 5.9 million, up from its earlier forecast of 5.6 million to 5.9 million.
The telecom industry has been seeing a gradual moderation in postpaid phone net additions after hitting record levels in 2021 and 2022. Industry-wide postpaid phone net additions are expected to moderate in 2023 to 8.5 million from a near-record 9.3 million in 2022, according to analysts at Goldman Sachs.
T-Mobile’s total revenue for the three months to September stood at $19.25 billion, compared with analysts’ average estimate of $19.32 billion, according to LSEG data.
Excluding items, the company earned $1.82 per share, beating Wall Street expectations of $1.74.
Rivals Verizon and AT&T both raised their annual free cash flow forecasts after attracting more subscribers than expected in the third quarter.
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