T-Mobile charges back to subscriber growth in Q3

T-Mobile USA reported stronger subscriber growth in the third quarter, and said it was encouraged by increased smartphone penetration and data usage. However, the nation's No. 4 carrier continued to struggle with postpaid subscriber losses.

Deutsche Telekom, T-Mobile's parent company, reported net income of $1.47 billion, up from $1.36 billion in the year-ago period. However, Deutsche Telekom's adjusted earnings before interest, taxes, depreciation and amortization fell on higher subsidy costs for handsets at T-Mobile USA.

Here is a breakdown of T-Mobile's key quarterly metrics:

Subscribers: T-Mobile reversed subscriber trends and added 137,000 net subscribers in the quarter, an improvement from net customer losses of 77,000 in the year-ago quarter and 93,000 in the second quarter. The growth, however, was driven primarily by prepaid and MVNO customers; T-Mobile added 197,000 net prepaid customers in the quarter, up from 63,000 net prepaid additions in the third quarter of 2009. The carrier continued to struggle in postpaid: T-Mobile lost 60,000 postpaid subscribers in the quarter, an improvement from 140,000 net postpaid losses in the year-ago period, but a sharp drop from 106,000 net postpaid additions in the second quarter. T-Mobile served 33.8 million customers at the end of the quarter, including a total of 1.8 million connected devices.

Financials: The carrier's net income fell to $320 million in the quarter, down from $417 million in the year-ago quarter and $404 million in the second quarter. T-Mobile said stable service revenues were offset by expenses related to T-Mobile's rollout of HSPA+. Total revenues came in at $5.35 billion, largely flat from $5.36 billion in the second quarter and down slightly from $5.38 billion in the third quarter of 2009. T-Mobile's service revenues were $4.71 billion, flat from $4.70 billion in the second quarter but down slightly from $4.73 billion in the year-ago quarter--the carrier blamed a decline in voice revenue.

Churn: T-Mobile's contract churn was 2.4 percent in the quarter, up from 2.2 percent in the second quarter and flat from the year-ago period. Deutsche Telekom CEO René Obermann said he visited U.S. stores and spoke with customers who told him that they wanted  Apple's (NASDAQ:AAPL) iPhone, currently only available through AT&T Mobility (NYSE:T). Therefore, he said, it will be key to push alternative device options, including phones running Google's Android platform, like the G2 and myTouch 4G.

ARPU: Blended average revenue per user was $47 in the third quarter of 2010, flat from both the second quarter and the year-ago quarter.

Data: Data service revenues clocked in at $1.26 billion in the third quarter of 2010, up 25 percent from the year-ago period. Data service revenues in the quarter represented 27 percent of blended ARPU, up from 21 percent of blended ARPU in the year-ago quarter. T-Mobile said that 7.2 million customers were using smartphones on its network, up 11 percent from 6.5 million smartphone customers in the second quarter and more than double the carrier's 2.8 million smartphone customers as of the third quarter of 2009.

T-Mobile CTO Neville Ray told GigaOM the carrier has seen a 150 percent increase in data traffic during the past three quarters. The carrier expects to reach 100 markets and 200 million people with HSPA+ by year-end.

For more:
- see this release
- see this Bloomberg article
- see this GigaOM post
- see this FierceWireless Q3 earnings page

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T-Mobile debuts myTouch with Video Chat, adds 16 HSPA+ markets
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