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T-Mobile’s Plan to Blow Up the Wireless Industry Is Starting to Work

T-Mobile’s crazy plan to upend the cell phone carrier model is starting to pay off. The fourth-place carrier added 1.3 million monthly customers in the first quarter of 2014, according to its quarterly earnings report. That was more than AT&T and Verizon combined (Sprint lost subscribers during the quarter).

The T-Mobile turnaround is thanks to its “Un-carrier” initiative, which has seen the company eliminate long-held traditions of the wireless industry, such as two-year contracts, high international data fees and automatic overage charges. T-Mobile has even gone so far as to pay customers up to $650 in cash and store credit to jump ship from a competing carrier.

Together, these moves are helping the company grow its customer base. “A year ago I promised that we would bring change to what I called this arrogant U.S. wireless industry,” T-Mobile CEO John Legere said in an earnings statement. “We are delivering on that promise and our results reflect the growing customer revolution that we’ve ignited.”

Though the “Un-carrier” model is boosting users, it’s not helping profits. The company posted a loss of $151 million for the quarter, down from $107 million profit in the first quarter of 2013. That translates to a loss of 19 cents per share, much worse than analysts’ estimates of a 10-cents-per-share loss. Revenues for the quarter were $6.88 billion, slightly off from estimates of $6.92 billion.

Underwhelming financials haven’t hurt T-Mobile’s stock, though, which jumped nearly 9% in early morning trading following the earnings release. The company’s shares have nearly doubled in value in the past year. For now, subscriber growth is all T-Mobile needs to please Wall Street, and the company is bullish on its ability to recruit new customers going forward. T-Mobile boosted the high-end of its guidance on projected monthly customer additions for the year from 3 million to 3.3 million.

Of course, T-Mobile’s radical new model might itself be disrupted if Sprint successfully buys the company out. The nation’s third-largest telco is reportedly talking to banks in preparation for a takeover bid.

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