T-Mobile Hangs Growth Hopes on HSPA+ in US

Deutsche Telekom AG (NYSE: DT) is looking to compelling smartphones and a mobile broadband HSPA+ network upgrade in the US to lure more customers to T-Mobile US Inc. and drive revenue growth, after a reporting a disappointing first quarter. (See Deutsche Telekom Posts Q1.)

T-Mobile lost 77,000 customers in the first quarter, compared with a net addition of 415,000 customers in the same quarter last year. The operator's total customer base at the end of the first quarter was 33.7 million, which is down from 33.8 million at the end of the fourth quarter last year and up from 33.2 million at the end of the first quarter last year.

Those subscriber losses hit T-Mobile's revenues in the first quarter. Total revenues were down 2.2 percent to $5.28 billion in the first quarter, compared with $5.4 billion in the same period last year. And first-quarter service revenues fell 3 percent to $4.63 billion compared with $4.77 billion in same period last year. T-Mobile said the revenue decrease was mainly due to the net losses of "branded customers" (which excludes MVNO customers and connected devices).

Average revenue per user (ARPU) in the first quarter was $46, which is flat compared to the fourth quarter last year and down from $48 in the first quarter last year.

Deutsche Telekom CEO René Obermann said he was "dissatisfied" with the new customer growth at T-Mobile USA, but he defended his US investment.

T-Mobile USA, he insisted, "is a cash cow… We are earning good money in the US. And with the mobile Internet, our cash cow is now moving to where the grass is richer. [We will] put every effort into growing data revenues and mobile Internet [services]."

Those efforts will mainly be focused on the 3G network upgrade to HSPA+, with peak downlink speeds of 21 Mbit/s, and continuing to add new smartphones and devices to its portfolio.

The operator has already launched the HSPA+ upgrade in Philadelphia, New York, New Jersey, Long Island, and suburban Washington, and the Los Angeles market will be launched soon. The operator said its 3G network now covers 208 million people, and it reiterated plans for the HSPA+ upgrade to cover 185 million people by the end of this year. (See CTIA 2010: T-Mobile Talks Up 3G in the USA, T-Mobile Steps Up HSPA+ in Philly, MWC 2010: T-Mobile Boosts Backhaul, and T-Mobile Ups 3G Stakes.)

For further network expansion in the US, T-Mobile USA has been linked to talks with new LTE wholesaler Harbinger Capital Partners LP . Obermann did not shed any light on these reports, saying he could not comment on the speculation. (See T-Mobile Talks to Harbinger .)

At the end of the quarter, the operator had 5.2 million customers with 3G "converged" devices -- such as the T-Mobile MyTouch 3G, Motorola CLIQ XT, and BlackBerry Bold 9700 -- up from 1.5 million customers in the same period last year. Other new smartphones that the operator has are the High Tech Computer Corp. (HTC) (Taiwan: 2498) HD2, Nokia Corp. (NYSE: NOK) 5230 Nuron, Google (Nasdaq: GOOG)'s Nexus One, and the Garminfone.

The operator said that these kinds of devices, as well as the HSPA+ upgrade, were driving Internet access revenue growth.

T-Mobile USA's service revenues increased 18 percent to $1.1 billion compared with the year-ago quarter. Data services accounted for 23.8 percent of ARPU, or $10.90 per customer, in the first quarter.

— Michelle Donegan, European Editor, Light Reading Mobile

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