T-Mobile loses 77,000 subs in Q3

T-Mobile USA reported a net loss of 77,000 subscribers in the third quarter, relatively weak financials and subscriber metrics showing increasing churn and declining ARPU--all indications that the nation's No. 4 carrier is losing share to market heavyweights Verizon Wireless and AT&T Mobility, which both posted notable subscriber gains during the period, as well as Tier 2 flat-rate carriers.

Perhaps in an effort to stem the receding tide, T-Mobile in October unveiled new unlimited service plans aimed at boosting its value proposition. The carrier also touted the growth of its 3G network, which it said now reaches 167 million people. Nonetheless, it's clear the carrier is facing a range of challenges. Here's a breakdown of some of T-Mobile's key quarterly metrics:

Financials: The carrier reported net income of $417 million, down from $425 million in the second quarter and $442 million in the year-ago quarter. However, T-Mobile's parent company, Deutsche Telekom, posted a rise in net income to $1.42 billion, up from $1.33 billion in the third quarter last year. T-Mobile's total revenues in the quarter clocked in at $5.38 billion, up from $5.34 billion in the second quarter but down from $5.51 billion in the year-ago quarter. The carrier said that the higher revenues were driven by higher equipment sales, partially from an expanded data device lineup. However, service revenues were $4.73 billion, down from $4.77 billion in the second quarter and $4.491 billion in the third quarter last year.

Subscribers: The carrier's net subscriber loss of 77,000 sharply contrasts with the 670,000 net subscriber additions it had in the third quarter last year--and the 325,000 net adds it had in the second quarter. T-Mobile lost 140,000 contract customers in the quarter, and even its prepaid net adds were only 63,000 in the third quarter, down from 268,000 in the second quarter and 377,000 in the third quarter of 2008. The company blamed fewer gross adds and higher churn from Flex Pay customers for the overall loss in subscribers. T-Mobile ended the quarter with 33.4 million customers.

Churn: Contract churn was 2.4 percent, up from 2.2 percent in the second quarter and flat compared with the third quarter last year.

ARPU: Blended ARPU was $47 in the third quarter, down from around $48 in the second quarter of 2009 and $52 in the year-ago quarter.

Data: T-Mobile's data services revenue reached $1 billion in the third quarter, representing 21.1 percent of blended ARPU, or $10.00 per customer--an increase from 20.8 percent/$9.90 per customer in the previous quarter and up from 17.3 percent/$8.90 per customer a year ago, translating to 18 percent year-over-year data services revenue growth.

For more:
- see FierceWireless' Q3 earnings page [1]
- see this release [2]
- see this Bloomberg article [3]
- see this WSJ article [4] (sub. req.)

Related Articles:
Is it time for T-Mobile to differentiate itself? [5]
T-Mobile CTO: 40% of Q4 sales will be smartphones [6]
T-Mobile debuts new unlimited calling plans [7]
T-Mobile adds 325,000 subs, posts weaker revenue [8]
T-Mobile's net income drops 30% in Q1 [9]