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 26 6,000 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 expenses grew considerably to $7.7 billion from $6.7 billion a year ago. T-Mobile posted a net profit of $101 million compared to a year earlier loss of $20 million.
However, the operator warned that increased promotional activity in will hit its earnings in the coming three months.
"Adjusted EBITDA in the first quarter of 2015 is expected to be significantly impacted by a large investment to front end customer growth in 2015," T-Mobile said.
