T-Mobile Posts Strong Gains in Wireless Customers, Raises Outlook |

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posted a steep second-quarter loss as costs tied to its network overhaul and legal expenses piled up, but the wireless carrier raised its outlook for the year as it added more of its most valuable customers.

The Bellevue, Wash., company posted a net gain of 723,000 postpaid phone subscribers in the June quarter. The increase topped the average 573,000-connection estimate from Wall Street analysts, according to FactSet. The second-quarter postpaid phone-customer-gain figure excluded about 284,000 connections that were lost as the company shuttered its 3G network, disconnecting users who hadn’t yet upgraded to a newer phone.

Investors and analysts track postpaid phone customers to gauge wireless-company health because it measures trends among reliable monthly bill-payers.

AT&T Inc.

added 813,000 postpaid phone customers, though it warned that some subscribers were falling behind on their monthly bills.

Verizon Communications Inc.,

the largest in the industry, added 12,000 net postpaid phone connections. The two companies reported earnings last week.

As inflation climbs in the U.S., rising food and energy costs have pushed the nation’s most popular price index to its highest level in four decades. WSJ’s Gwynn Guilford explains how the consumer-price index works and what it can tell you about inflation. Illustration: Jacob Reynolds

T-Mobile Chief Executive

Mike Sievert

said inflation presented opportunities for a company with a history of serving cash-strapped customers. T-Mobile earlier this year raised fees attached to some plans, though its rivals have introduced sharper rate hikes in recent months.

“There is a flight to value that is beginning to happen, and T-Mobile is famous for value in our category,” Mr. Sievert said on a call with analysts.

Bad-debt expense rose to $311 million in the June quarter, up from $210 million in the previous quarter and $72 million a year earlier. That can point to trouble in some areas of the economy, but Mr. Sievert said bad debt is closer to a “more historic level” the company is comfortable with.

T-Mobile still swung to a $108 million loss in the second quarter, or 9 cents a share, from a profit of $978 million, or 78 cents, a year earlier. Overall revenue fell 1.2% to $19.7 billion.

The reported loss also included nearly $1 billion of higher costs related to the write-down of a wired network the company acquired from Sprint; a legal settlement tied to the 2021 theft of data on millions of current, former and potential customers; and other expenses.

The company raised its guidance for the year, saying it expects net postpaid customer additions of between 6 million and 6.3 million, up from its earlier projection of 5.3 million to 5.8 million. It also slightly revised upward its free-cash-flow target to between $7.3 billion and $7.6 billion.

T-Mobile shares rose about 3.5% on Wednesday morning to $138.69.

—Drew FitzGerald contributed to this article.

Write to Alex Harring at alex.harring@wsj.com

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