T-Mobile Stems Sub Losses With Pre-Paid Plans

T-Mobile US Inc. said Thursday morning that it started to reverse customer losses in its third quarter with new "value plans" and a "prepaid 4G" offering.

The Deutsche Telekom AG (NYSE: DT) subsidiary reported net customer additions of 126,000 people "related to Value plan and unlimited Monthly 4G prepaid growth." This compares to additions of 137,000 for the same quarter last year but a loss of 50,000 customers in the second quarter of 2011. The company still lost 186,000 monthly contract customers in the third quarter but had its overall numbers bolstered with new pay-as-you-go users. (See Euronews: Deutsche Telekom Confirms Guidance.)

The operator also notes that the growth of smartphones on its network is giving a positive lift to its data revenues. As of the end of the quarter, 10.1 million T-Mobile customers were using 3G and "4G" HSPA+ smartphones, up 40 percent compared to 7.2 million as of the end of the third quarter of 2010. This helped drive data average revenue per user (ARPU) up 13 percent, to $14.00 from $12.40, versus the year-ago quarter.

The operator is mindful, however, of the churn prospects it may be facing in the fourth quarter as customers move to other U.S. operators that can offer them the iPhone 4S. "Postpay [monthly contract] churn, in particular related to the iPhone 4S launches by competitors, will continue to be an area of concern," notes T-Mobile CEO Philip Humm, in a statement. (See AT&T Predicts 'Blockbuster' Wireless Q4 and Apple Preps for a Holiday iPhone Revival.)

Of course, iPhone concerns could disappear for T-Mobile if or when AT&T Inc. (NYSE: T) completes its proposed $39 billion merger with the fourth-ranked U.S. operator. The deal is getting scrutiny from U.S. Department of Justice and taking fire from competitors like C Spire and Sprint Corp. (NYSE: S). Also, AT&T recently filed to delay the planned completion date of the merger from March 2012 to the middle of next year. (See DoJ Blocks AT&T/T-Mobile Merger.)

For the third quarter, T-Mobile posted a profit of $332 million on revenues of $5.2 billion, compared to a profit of $320 million on revenue of $5.4 billion a year ago. The operator reported costs of $51 million related to the AT&T merger for the quarter.

— Dan Jones, Site Editor, Light Reading Mobile

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