T-Mobile USA continued to struggle with subscriber losses in the second quarter, the carrier's first full quarter since AT&T (NYSE:T) announced its plans to purchase T-Mobile for $39 billion. T-Mobile posted lower net profit and revenue in the quarter and the carrier's fate weighed on parent company Deutsche Telekom.
For the second quarter, T-Mobile reported net income of $212 million, down 48 percent from the $404 million it posted in the year-ago period. The carrier's total revenue clocked in at $5.1 billion, down from $5.4 billion in the year-ago quarter, and service revenue inched down to $4.6 billion from $4.7 billion in the year-ago quarter.
One of the bright spots for the company continues to be connected devices, which T-Mobile lumps in with its postpaid numbers. T-Mobile reported connected device net customer additions of 256,000 in the quarter, up 33 percent from the 192,000 it recorded in the first quarter and up 27 percent from the 202,000 it notched in the second quarter of 2010. Connected device customers totaled 2.3 million at the end of the quarter. T-Mobile's connected devices consist primarily of machine-to-machine connections.
Deutsche Telekom CEO René Obermann said the U.S. market continues to be a "difficult" one for the German telco, which reported that its net profit for the quarter fell 26.7 percent to $496 million. "The German business is very good, but in Europe the pace of decline is still high and if the company doesn't sell T-Mobile USA, it will stand in front of a pile of broken glass next year," Warburg Research analyst Jochen Reichert told the Wall Street Journal.
T-Mobile USA pointed out the continued expansion of its faster HSPA+ 42 network, which now covers 170 million POPs, as well as the fact that its 3G/HSPA+ smartphone customers now account for 29 percent of its total customer base, up from 27 percent in the first quarter and 19 percent in the year-ago period.
Here's a breakdown of T-Mobile's other key metrics for the quarter:
Postpaid subscribers: T-Mobile lost a total of 50,000 net subscribers in the quarter. The company reported postpaid net subscriber losses of 281,000 in the quarter, down from 471,000 net postpaid losses in the first quarter but a far cry from the 106,000 net postpaid additions it scored in the second quarter of 2010.
Prepaid subscribers: The company posted prepaid net subscriber additions, including MVNO customers, of 231,000 in the second quarter, down 18 percent from the 283,000 it notched in the first quarter but up from the 199,000 net losses it recorded in the year-ago period.
Churn: Blended churn, reflecting both postpaid and prepaid customers, decreased to 3.3 percent in the second quarter of 2011 from 3.4 percent in both the first quarter of 2011 and the second quarter of 2010. Postpaid churn clocked in at 2.4 percent, consistent with the first quarter but up from 2.2 percent in the second quarter of 2010. Prepaid churn dropped to 6.6 percent, down from 6.7 percent in the first quarter of 2011 and 7.6 percent in the year-ago period.
ARPU: The company's average revenue per user was $53 in the second quarter, up from $52 in the first quarter and each of the previous four quarters. Prepaid ARPU was $18 in the quarter, flat from both the first quarter and year-ago period.
Data: T-Mobile's data service revenues clocked in at $1.4 billion in the second quarter of 2011, up 17 percent from the second quarter of 2010. Data service revenues represented 30 percent of blended ARPU, or $13.60 per customer, up from 29 percent of blended ARPU, or $13.10 per customer, in the first quarter of 2011, and up from 25 percent of blended ARPU, or $11.60 per customer, in the second quarter of 2010.
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