It's not easy being in last place, and T-Mobile (NASDAQ:TMUS) knows the feeling all too well. The company used to hold up the rear when it came to the overall performance of the four major U.S. wireless carriers, but this year T-Mobile handed off the worst carrier title to Sprint (NYSE:S).
The latest RootMetrics report shows T-Mobile beat out Sprint's network in nearly every category for the first half of 2014 -- and it has its new LTE network to thank for that.
Back in March, while marking a year of LTE rollout, T-Mobile said, "In a span of just six months, T-Mobile deployed its 4G LTE network coast to coast and at a pace unprecedented in the U.S. wireless industry -- going from zero to nationwide coverage between March and September 2013."
Thanks to its massive LTE push, the company's high-speed network is available to 96% of Americans. In mid-2013, 157 million people across the U.S. had access to T-Mobile's 4G LTE network, and over the summer that number jumped to over 230 million. T-Mobile now outpaces Sprint's number of LTE points of presence, or POPs, and T-Mobile expects to reach 250 million people by the end of this year.
For comparison, Verizon -- which RootMetrics said has the best network -- has 306 million LTE POPs.
And T-Mobile is not done yet. Before the end of this year, the company will upgrade 50% of its 2G Edge network to LTE connections, and the remaining half by mid-2015.
Beefing up the network
For its existing LTE towers, T-Mobile recently upped its game by introducing 4x2 multiple-input and multiple-output, or MIMO, technology. The majority of LTE towers send two signals to smartphones, but the 4x2 tech doubles the tower signals to four.
This makes the LTE signal more consistent and reliable, and stronger at the fringes of T-Mobile's LTE coverage. It also has the added benefit of increasing data upload speeds. T-Mobile doesn't offer the 4x2 tech everywhere on its network, but it's using the connections to boost LTE signals in Chicago, Dallas, and San Antonio, according to Gigaom.
T-Mobile is expanding technology like this because it still lags a bit behind Sprint for overall network reliability, though it is catching up. At the end of 2013, RootMetrics said T-Mobile scored eight points below Sprint for reliability -- now it trails by less than one point.
T-Mobile's aggressive LTE expansion has resulted in some impressive customer gains over the past year, and the carrier is now nipping at the heels of Sprint's customer numbers.
Take a quick look at T-Mobile's net subscriber growth since the first quarter of 2012:
T-Mobile is outpacing the growth of all other U.S. wireless carriers. And it's not just the quarterly net additions that are going up. T-Mobile is now about to match -- or surpass -- Sprint's total subscriber count.
Just a few years ago, T-Mobile faced a dismal future, but a combination of marketing tactics, aggressive subscriber campaigns, and a new LTE network has pushed the company close to the No. 3 U.S. wireless carrier spot.
There was a lot of talk earlier this year of Sprint possibly purchasing T-Mobile, but that deal fell through, and it looks like T-Mobile might be better off for it. The carrier has built out its network and gained subscribers on its own. Meanwhile, Sprint looks to be moving in the wrong direction.
T-Mobile's rapid expansion has come at a price, with the company burning through billions of dollars to build its network and attract new customers. In the quarter ending in June, T-Mobile posted a surprising profit of $391 million, but much of that came from Verizon's payment of $731 million for a spectrum purchase. Investors watching T-Mobile should recognize that the carrier is spending a lot of money up front in hope that subscribers will stick around for the long term.
With Sprint and T-Mobile neck-and-neck in subscriber numbers, and with Sprint building out its new Spark network, there's no guarantee T-Mobile can maintain this breakneck growth.
Chris Neiger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.