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T-Mobile's 3G Craving

T-Mobile US Inc. added fewer subscribers in the second quarter of 2008 than it has at any time since the same quarter in 2006, possibly reflecting how the company has been hurt by its slow upgrade to 3G services.

T-Mobile announced this morning that it added 668,000 subscribers during the second quarter. In comparison, the operator signed up 981,000 new customers in the first quarter of the year and added more through the SunCom acquisition. (See T-Mobile Adds 2M in Q1.)

T-Mobile is not facing the problems that dog its larger rival Sprint Corp. (NYSE: S), which posted a $344 million loss for the quarter. The American Deutsche Telekom AG (NYSE: DT) subsidiary still grew revenues 14.4 percent year-on-year to $5.5 billion. (See Sprint Posts $344M Loss for Q2.)

Technology Business Research Inc. (TBR) , however, states that the operator still needs faster 3G networks to compete more fully with the two largest operators, AT&T Inc. (NYSE: T) and Verizon Wireless .

"The company's data revenue growth will accelerate once the company’s 3G network is rolled out on a larger scale and subscribers use 3G devices and data applications on the network," writes analyst Kate Price in a research note.

So far, T-Mobile has only deployed 3G in New York City, while its three larger rivals have nationwide networks. (See T-Mobile USA: 3G, Going on 4G?)

T-Mobile's 3G network has been a long time in the making. In September 2006, the operator spent $4.2 billion on Advanced Wireless Services (AWS) spectrum suitable for 3G. The company awarded vendor contracts for the nationwide network at the end of November 2006, saying that it planned to spend three years and more than $2 million on the project. (See T-Mobile USA: 3G, Going on 4G?)

The company said in April that it expected to launch 3G services over AWS in the summer and cover 80 percent of the top 20 markets in the United States by the end of the year. There have been very few signs of further deployments beyond NYC, however.

"Unfortunately for T-Mobile, this is not likely to occur until 2009," suggests analyst Price in her note today.

— Dan Jones, Site Editor, Unstrung

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