Optical/IP Networks

T-Mobile Looks Ahead as It Bleeds Customers

T-Mobile US Inc. continues to bleed customers even as executives focus on future 4G Long Term Evolution (LTE) upgrades and current cost reductions.

The Deutsche Telekom AG (NYSE: DT) subsidiary reported Thursday morning net customer losses of 205,000 for the second quarter, compared to 50,000 lost in the same quarter the year before. The company lost 557,000 monthly subscribers but added 227,000 pay-as-you-go customers in the second quarter.

T-Mobile reported operating income before depreciation and amortization (OIBDA) up 4.8 percent year-on-year to US$1.3 billion on service revenues of $4.4 billion in the second quarter compared to $4.6 billion in the same period in 2011.

The company's official release on the earnings looks forward to network upgrades and hoped-for expansion. "Looking ahead, T-Mobile USA will continue to invest in a number of key areas including the modernization of our network as we pave the way for LTE service in 2013, retail expansion, as well as an increased investment in promoting our brand," says Jim Alling, interim CEO, in the statement.

T-Mobile is hoping to launch LTE in major markets in 2013. Ericsson AB (Nasdaq: ERIC) and Nokia Networks are deploying LTE equipment at 37,000 cell sites in 2012 and 2013.

The operator also says it is on track to achieve to achieve $900 million in gross savings through reorganization. T-Mobile has said it will cut around 2,800 positions so far this year.

Why this matters
Like Sprint Corp. (NYSE: S), T-Mobile is trying to find a strategy to help it compete in a 4G world. Even as it deploys LTE, it seems that pay-as-you-go users getting into low-cost "4G" and other programs are the currently the brightest hope for the operator.

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