T-Mobile US (NYSE:TMUS) CEO John Legere essentially said that T-Mobile has already passed Sprint (NYSE: S) in terms of subscribers if inactive Sprint MVNO customers are taken out of Sprint's subscriber count.

Legere has been gleeful in his certainty that T-Mobile will pass Sprint to become the nation's third largest wireless network operator in terms of total subscribers. During T-Mobile's fourth-quarter earnings call, Legere said that because of the way Sprint accounts for its subscribers, T-Mobile has already passed Sprint. He pointed out that, in its filings with the Securities and Exchange Commission, Sprint is counting 1.7 million MVNO customers in its subscriber base that it has not received any payments from in six months.

"Subscribers through some of our MVNO relationships have inactivity either in voice usage or primarily as a result of the nature of the device, where activity only occurs when data retrieval is initiated by the end-user and may occur infrequently," Sprint said in its most recent filing. "Although we continue to provide these subscribers access to our network through our MVNO relationships, approximately 1,738,000 subscribers at December 31, 2014 through these MVNO relationships have been inactive for at least six months, with no associated revenue during the six-month period ended December 31, 2014."

Sprint counted 1.637 million such customers end of the third quarter of 2014, 1.519 million at the end of the second quarter and 1.421 million at the end of the first quarter, according to Sprint's SEC filings.

Sprint told CNET it has used this accounting method for years, and has a policy to not remove a customer from its records until its MVNO partner officially notifies the company. The company declined to comment further on Legere's comments, according to CNET.

As of the end of the fourth quarter of 2014, Sprint said it counted 55.929 million total customers, including the MVNO customers in question, and T-Mobile said it counted 55.018 million customers--officially 911,000 behind Sprint.

"Going into 2013, Sprint had 55 million customers…going into '14, they had 55 million customers. Going into this year, they have 55 million customers. In that period, they lost 3.3 million postpaid customers as well," Legere said during T-Mobile's earnings call, according to a Seeking Alpha transcript of his remarks. "At that same time period, T-Mobile had 33 million customers. We merged with MetroPCS and went to 42 million customers. And we've since added 13 million customers to get up to, guess what, 55 million customers."

Legere said the industry standard for turning off service for inactive MVNO customers is 60 days or 90 days, and that Sprint changed its policy to six months. Legere said the 1.7 million inactive MVNO customers should not count, and observers should "do the math" to conclude that T-Mobile has more customers than Sprint. However, he said that, based on T-Mobile's trajectory, the carrier will likely surpass Sprint in the next few quarters anyway.

T-Mobile added 2.1 million total customers in the fourth quarter, far more than the 842,000 new customers Sprint added during the quarter.

Sprint CEO Marcelo Claure said if T-Mobile had more customers than Sprint it would not be a major issue. "T-Mobile has great momentum," Claure told CNET earlier this month. "I'm focused on fixing the fundamentals whether we're No. 3 or No. 4. Customers don't care about rank. I'm not worried about whether we're No. 3 or No. 4."

For more:

- see this CNET article

- see this The Verge article

- see this TMoNews article



Related Articles:

T-Mobile open to working with Dish, is 'rooting' for Sprint to be successful

Sprint's Claure: It doesn't matter if T-Mobile passes us as No. 3 carrier - we're focused on improving

Sprint slows postpaid phone subscriber losses, will continue to target Verizon and AT&T

T-Mobile's Legere, Sprint's Claure trade insults over Super Bowl ads

T-Mobile scores 2.1M total new customers in Q4