Earnings preview: T-Mobile to shine on subscription growth, Sprint deal in Q4

When T-Mobile (TMUS) reports its fourth-quarter results Thursday before the opening bell, the company’s rapidly expanding customer base will be in focus, particularly in the wake of its merger agreement with rival telecom firm Sprint (S).

Market watchers’ consensus forecast is that December-quarter earnings will jump 33% annually to $0.84 per share. Revenues are estimated to gain 6.8% to $11.4 billion. Adoption of new technology and the roll-out of 5G have been drawing customers to T-Mobile’s services, which is expected to have had a positive impact on the top-line performance. Initial estimates indicate that the company added a record number of subscribers during the quarter.

In the third quarter, revenues moved up 6% annually to a record high of $8.1 billion, aided by a further strong growth in subscription numbers. Consequently, earnings per share moved up to $0.93 from $0.92 in the third quarter of 2017. Both the numbers surpassed market expectations.

New technology and the roll-out of 5G are expected to have a positive impact on the company’s top-line performance 

Taking its planned merger with Sprint closer to completion, T-Mobile secured shareholders’ approval for the deal during the fourth quarter. The combination is expected to give the company a competitive edge over its rivals in the fast-evolving 5G segment.

Last week, Sprint reported a net loss of $141 million or $0.03 per share for its most recent quarter, compared to profit last year, though a marked uptick in wireless services pushed up revenues that also topped analysts’ forecast. AT&T posted a 15% growth in third-quarter revenues, with strong contributions from the Time Warner acquisition. Earnings per share rose to $0.86 from $0.78.

Related: T-Mobile-Sprint deal likely to close in first quarter

Considering the positive outlook on T-Mobile and the high chances of fourth-quarter earnings beating the street view, the stock is a suitable investment option for long-term investors, ahead of the earnings report.

T-Mobile shares traded lower during Tuesday’s regular session, still hovering near the nine-year high seen last year. The stock has gained about 15% in the past twelve months.

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