Customers are flocking to T-Mobile US (NASDAQ:TMUS). And with the No. 3 U.S. wireless carrier attempting to acquire rival Sprint (NYSE:S), the company could soon become an even more dominant force within the industry.

T-Mobile results: The raw numbers 

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Revenue

$10.46 billion

$9.61 billion

8.8%

Net income

$671 million

$698 million

(3.9%)

Earnings per share

$0.78

$0.80

(2.5%)

Data source: T-Mobile Q1 2018 earnings release.

What happened with T-Mobile this quarter?

T-Mobile, once again, paced the wireless industry with 1.4 million net new subscribers, of which 1 million were of the postpaid variety, who pay monthly bills and are the most valuable customers for wireless carriers. This marked T-Mobile's 20th consecutive quarter with more than 1 million net customer additions, and it's expected to be the company's 17th straight quarter of industry-leading growth.

In a press release, CEO John Legere highlighted T-Mobile's accomplishments in his typical bold style:

Five years ago, we came together with MetroPCS and wireless has never been the same. Becoming a public company was monumental and accelerated our mission to change a stupid, broken, arrogant industry! 2018 started off with a bang, and T-Mobile just delivered industry-leading postpaid phone nets, record high service revenues, and record low postpaid phone churn, and our momentum continues! 

As Legere alluded to, in addition to enticing new customers, T-Mobile continues to get better at retaining its existing customers. The wireless carrier's first-quarter postpaid churn rate improved 11 basis points year over year, to 1.07%.

This powerful combination of subscriber growth and strengthening retention helped to drive T-Mobile's revenue higher by 8.8% to $10.5 billion. In turn, EBITDA -- adjusted to exclude stock-based compensation, spectrum gains, and certain other items -- increased 10.8% to $3 billion. Moreover, operating cash flow jumped 27% to $770 million, and free cash flow surged 261% to $668 million.

Looking forward

These strong results prompted T-Mobile to raise its full-year operational and financial outlook, which now includes:

  • Postpaid net customer additions of between 2.6 million and 3.3 million, up from a previous forecast of 2 million to 3 million.
  • Adjusted EBITDA of $11.4 to $11.8 billion, up from $11.3 billion to $11.7 billion.

Additionally, T-Mobile said it remains on track to hit its long-term free cash flow target of $4.5 billion to $4.6 billion in fiscal year 2019.

Sprint CEO Marcelo Claure and T-Mobile CEO John Legere sitting on stools next to each other.

Sprint CEO Marcelo Claure, left, and T-Mobile CEO John Legere, right, are attempting to combine forces. Image Source: T-Mobile US.

Legere also took time to highlight some of the possible benefits of T-Mobile's recently announced merger deal with Sprint during a conference call with analysts.

The new company will be a pro-consumer, strongly disruptive force. This transaction and the unique combination of resources it brings will enable the new company to do things that neither T-Mobile nor Sprint could do on its own, all for the benefit of the American consumer.

The new company will be able to rapidly build the first and best nationwide 5G network with unprecedented capacity and scale to truly accelerate innovation and increase competition. The combination will also supercharge the pro-consumer Un-carrier strategy with innovative service offerings, lower prices, and increased competition in wireless, broadband, entertainment and beyond.

Whether or not regulators agree is another question. As such, investors will want to keep abreast of news regarding this potential blockbuster merger, which could radically alter the competitive landscape of the wireless industry.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.