New T-Mobile (TMUS.US) new leader "first test" encounters cold response: Q4 user growth falls below expectations, profits decrease by 27% adding gloom

T-Mobile The fourth-quarter mobile phone user increment of T-Mobile US (TMUS.US) was lower than analysts' expectations, posing the first challenge for the new CEO, Sireni Gopalan. As of the time of writing, the stock has fallen nearly 5% in pre-market trading. The operator, headquartered in Bellevue, Washington, disclosed in a statement on Wednesday that fourth-quarter earnings declined year-on-year, partially due to specific severance costs. Earnings per share were $1.88, a 27% decrease from the previous year, falling short of analysts' average expectation of $2.03. Revenue was $24.3 billion, an 11% increase year-on-year, slightly higher than expected. Adjusted EBITDA was $8.45 billion, slightly higher than the forecast. The full-year core adjusted EBITDA (excluding leasing income) is expected to be in the range of $37 billion. T-Mobile added 962,000 new wireless users in the quarter, lower than the market expectation of 992,000. Despite a slight decrease from the 1 million increment in the third quarter, T-Mobile still outperformed competitors AT&T (T.US) and Verizon Communications (VZ.US) in customer acquisition during the same period. The three major US wireless giants are currently embroiled in a battle for users, offering free phones, new TV services, and streaming packages as promotional tools to attract new customers. However, these "land-grabbing" activities come at a cost, especially during the period of Apple Inc.'s new device releases when carriers subsidize devices at a loss, and users become accustomed to frequent contract hopping for the best deals. As the second-largest wireless operator in the US, T-Mobile aims to build a differentiated moat in terms of value and network quality. Gopalan stated in an interview that users should frequently perceive the benefits brought by carriers, not just during device upgrades. T-Mobile's practices include offering free Netflix subscriptions and Wingstop chicken exchange for continuous incentives. In November last year, Gopalan, who was promoted to Chief Operating Officer, stated, "This is just a footnote in our restructuring of customer relationships," and "Our logic is not 'a contract every three years, come to the store to change phones.'" Analysts believe that Gopalan will "most likely continue with an aggressive promotional strategy to maintain the top position in the industry's net gain of postpaid phone users." Broadband business remains an important growth engine for T-Mobilethe company added 558,000 broadband users in the fourth quarter, far exceeding the expected 504,000. Gopalan reiterated that the company is evaluating fiber acquisitions, with the condition of not excessively building copper cable networks and creating incremental value for shareholders and customers. Mike Katz, President of Enterprise and Product Business, stated that T-Mobile still has significant penetration space in "small towns and rural areas in the United States," where brand awareness remains low. He also pointed out that while T-Mobile's core customer base is mainly value-sensitive users, the company is gradually breaking through to attract high-end customers who prioritize network quality. "More and more users are realizing that the real top-notch network is in the hands of T-Mobile, not AT&T or Verizonthis is our major opportunity," Katz said.