Shares of T-Mobile US (TMUS) climbed in morning trading after the company reported its eighteenth consecutive quarter of adding more than 1M total customers. While the carrier reported quarterly results, it skirted the topic of merger discussions with Sprint (S). QUARTERLY EARNINGS: T-Mobile’s third quarter earnings per share of 63c handily beat analysts’ consensus estimates of 46c, while revenue of $10.02B was essentially in-line with the $10.01B analysts expected. The “Un-carrier” reported 1.3M total net additions, its eighteenth straight quarter of adding more than 1M total customers, with 595,000 branded postpaid phone net additions and 226,000 branded prepaid net additions and 1.23% postpaid phone churn. Branded postpaid phone ARPU was $46.93 in Q3, down 2.5% from the year-ago period, while branded prepaid ARPU was $38.93, up 2.4% y/y. T-Mobile, which is 64% owned by Deutsche Telekom (DTEGY), raised and narrowed its postpaid net customer additions guidance for fiscal 2017 to 3.3M-3.6M from 3M-3.6M. T-Mobile also raised and narrowed adjusted EBITDA guidance for the second time this year to $10.8B-$11B from $10.5B-$10.9B. The three-year CAGRs guidance for net cash provided by operating activities and free cash flow from full year 2016 to full year 2019 remains unchanged at 15%-18% and 45%-48%, the company said. T-Mobile continues to expect that branded postpaid phone ARPU in FY17 will be generally stable compared to FY16. VLOG POST: Instead of hosting its typical earnings conference call, the company posted a video blog of CEO John Legere discussing the results. “With all the rumors and speculation out there, we decided that we wanted to make sure you all saw and focused on our Q3 results and not just on the rumors and speculation that seem to fill the news every day,” Legere said. On October 6, Bloomberg reported that Sprint and T-Mobile are working out the final details on a merger agreement, which should be announced at the end of the month. On October 13, Nikkei reported that the merger agreement could be announced soon, citing a broad pact reached with SoftBank (SFTBF), which owns 83% of Sprint. On October 16, Reuters reported that, according to people familiar with the matter, the companies plan to announce the merger without any immediate asset divestitures in order to preserve their spectrum holdings, while Bloomberg said on Thursday that the merger would be delayed “for a few weeks.” Sprint, which is scheduled to report its earnings on Wednesday, is also planning to skip its conference call and post a recorded message. T-MOBILE, SPRINT CONTINUE DUE DILIGENCE: CNBC’s David Faber said this morning that T-Mobile and Sprint are continuing their due diligence on a potential merger and an announcement could be made by early to mid-November, according to sources. ANALYST COMMENTARY: In a note to clients, Jefferies said that T-Mobile’s Q3 performance and guidance increase highlights the fundamental strength of the Un-carrier and thinks there is “very little downside here.” PRICE ACTION: T-Mobile is up nearly 2% to $61.56 in morning trading. Shares are up over 7% year-to-date.
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