T-Mobile U.S. profit beats estimates as it signs up more customers

(Reuters) – T-Mobile US Inc first-quarter revenue and profit jumped from a year earlier, beating Wall Street’s estimates, as competitive pricing lured new subscribers to its monthly cellphone plans.

Shares of the Bellevue, Washington-based company rose marginally after hours to $73.00.

The company said it added a net 656,000 phone subscribers in the first quarter, up from 617,000 additions a year earlier and substantially more than the 612,000 new subscribers analysts had expected, according to research firm FactSet.

That was due to T-Mobile’s lower prices compared to its competitors, as well as an expansion into more rural areas of the United States, the company said.

T-Mobile, the third-largest U.S. wireless carrier by subscriber count, is awaiting approval of its $26 billion deal to buy smaller rival Sprint Corp, which it has said will give it scale to compete with market leaders Verizon Communications Inc and AT&T Inc.

T-Mobile US Chief Executive John Legere said during a post-earnings call with analysts that he remained “optimistic and confident” that U.S. regulators would recognize the merger as good for consumers, and said he still expects deal approval in the first half of this year.

Reuters reported last week that the U.S. Justice Department has told T-Mobile and Sprint it has concerns about the merger in its current structure.

At a meeting on Wednesday, U.S. regulators questioned Sprint and T-Mobile executives about the deal.

T-Mobile US net income surged to $908 million, or $1.06 per share, in the three months ended March 31, from $671 million, or 78 cents per share, a year earlier.

Analysts had expected the company to earn 91 cents per share, according to IBES data from Refinitiv.

Revenue rose nearly 6 percent to $11.08 billion, in line with estimates.

The carrier said it expects Sprint merger costs of up to $250 million during the second quarter, which it said will negatively impact net income and cash flows.