Now that we've digested Deutsche Telekom AG (NYSE: DT)'s third-quarter results, it's time to take a closer look at its mobile business, T-Mobile International AG , and grade its performance as we like to do. (See DT Reports Q3.)

Last quarter, Unstrung lowered T-Mobile's grade from a B+ to a B because it was not able to stem falling revenues in its home market. So, has the operator improved in the third quarter? (See Carrier Scorecard: T-Mobile International and Carrier Scorecard: T-Mobile.)

The basic facts and figures show that T-Mobile's group revenues were up 8.6 percent to €8.9 billion (US$13 billion) in the third quarter, compared to €8.2 billion ($12 billion) in the same period last year. But operating profit fell 2.4 percent in the third quarter, compared to the same quarter last year.

The operator's group average revenue per user (ARPU) isn't declining as much as it is for its peers, Vodafone Group plc (NYSE: VOD) and Orange (NYSE: FTE)'s Orange. T-Mobile's group ARPU was down just 1.1 percent in the third quarter, compared to last year. (See Table 1 -- also Carrier Scorecard: Orange and Carrier Scorecard: Vodafone.)

{Table 1}The third-quarter results show that T-Mobile US Inc. is clearly the shining star in the German operator's portfolio. While T-Mobile USA is the fourth largest operator in the U.S., it is the German operator's largest subsidiary by revenue. (See T-Mobile Adds 857,000 Subs and T-Mobile USA Reports Q3.)

Monthly ARPU at T-Mobile USA was up 2 percent in the third quarter to $53 from $52 in the same period last year. T-Mobile was smart to expand its presence in the growing U.S. market with the acquisition of SunCom Wireless Inc. for $2.4 billion in September. And clearly, T-Mobile's lack of 3G in this market is not hindering growth at this point. (See T-Mobile to Buy SunCom for $2.4B, T-Mobile Acquires SunCom, T-Mobile Gearing Up 3G?, T-Mobile Confirms 3G Plans, and T-Mobile Awards 3G Deals.)

T-Mobile (UK) is the other bright spot in the third quarter. The operator boosted ARPU by 5 percent to €24.5 in the third quarter, compared to €23.4 in the second quarter this year. Compared to the third quarter last year, ARPU was up 5.2 percent.

T-Mobile U.K. is in talks with Three UK for a network sharing deal, and some analysts have leapt to the conclusion that the German operator may even make a bid for 3. (See T-Mobile to Bid for 3? and 3, T-Mobile Talks.)

T-Mobile says its U.K. and U.S. subsidiaries will be the main revenue growth drivers for the rest of this year.

But its home market and nearby Austria are problem areas. Customer growth slowed in Germany due to losses in prepaid customers, and revenues were down 3 percent compared to the third quarter last year. T-Mobile says the revenue decline is due to fierce price competition in the country. In Austria, revenues and monthly ARPU were both down 10 percent compared to the same period a year ago. (See Table 2.)

{Table 2}It looks as if it will take more than the iPhone to change T-Mobile's fortunes in its home market. (See T-Mobile Germany Gets iPhone, VOD Spoils iPhone Fun, T-Mobile Unlocks iPhone, and Euro iPhone Update.)

Data revenue, excluding SMS services, accounted for 5.5 percent overall mobile communications revenue in the third quarter, which is an increase of 1.2 percent compared to the same period last year.

With the acquisitions of SunCom in the U.S. and France Telecom's operations in the Netherlands for €1.3 billion, Deutsche Telekom CEO Rene Obermann is making good on his strategy to expand the international mobile business through acquisitions.

This quarter, T-Mobile keeps its B grade. The strong growth in the U.K. and the U.S. balances out the difficulties in Germany and Austria.

— Michelle Donegan, European Editor, Unstrung