(Reuters) - T-Mobile US Inc's (>> T-Mobile US) quarterly profit jumped nearly sevenfold as the No. 3 U.S. wireless carrier recorded a $2.2 billion gain from recent changes in U.S. tax laws, but Wall Street analysts raised questions about the company's growth.
T-Mobile has been using lower prices and added perks to take market share from larger rivals Verizon Communications Inc (>> Verizon Communications) and AT&T Inc (>> AT&T) in a saturated market for wireless services. The company ended merger talks with rival Sprint Corp (>> Sprint Corp) late last year.
In 2018, T-Mobile said it expects to add between 2 million and 3 million subscribers who pay a monthly bill. Analysts called the numbers conservative.
"Management always guides conservatively," said Jonathan Chaplin, an analyst at New Street Research, in a research note. He noted that in 2017, T-Mobile exceeded the high end of its initial expectations on subscriber additions.
But Craig Moffett, an analyst at MoffettNathanson, said in a note that cable companies' entry into the wireless market posed concerns about future growth. Comcast Corp (>> Comcast Corporation) already sells mobile service and Charter Communications Inc (>> Charter Communications Inc) plans to enter the market.
"It is not unreasonable to think that the two cable operators could capture a third of all market growth," he wrote. "It is not unreasonable to assume that even go-go T-Mobile will see slower subscriber growth."
Shares were down 2.5 percent to $60.50 in mid-morning trading.
The company said it added 891,000 phone subscribers in the fourth quarter, compared with 933,000 a year earlier.
T-Mobile's net income was $2.71 billion, or $3.11 per share, in the quarter ended Dec. 31, up from $390 million, or 45 cents a share, a year earlier.
Excluding items, the company earned 48 cents per share.
Revenue rose 5.1 percent to $10.76 billion. Analysts, on average, were expecting revenue of $10.83 billion, according to Thomson Reuters I/B/E/S.
Last month, the wireless carrier said it had closed on its acquisition of Layer3 TV, a startup that has marketed itself as a next-generation cable service, for an undisclosed amount. It has plans to launch a new streaming service this year.
(Reporting by Anjali Athavaley in New York and Supantha Mukherjee in Bengaluru; Editing by Shounak Dasgupta and Marguerita Choy)