T-Mobile losses mount, 99K subs defect in Q1

T-Mobile USA suffered another difficult quarter as customers left the carrier at an alarming rate--the company lost 99,000 subscribers in the first quarter of 2011, bringing its total subscriber base to 33.6 million, down from 33.7 million a year ago. In addition, T-Mobile's profit dropped to $135 million, down from $362 million a year ago.

T-Mobile's service revenues were $4.63 billion in the first quarter, down from $4.69 billion in fourth quarter of 2010 but consistent with the $4.63 billion T-Mobile recorded in the same quarter a year ago.

Deutsche Telekom CFO Timotheus Höttges blamed the decline in part on the "intense" competition in the U.S. market, and he pointed specifically to Verizon Wireless' launch of LTE devices and the iPhone.

There were a couple of bright spots in the quarter: The company added 192,000 connected devices, up from 113,000 in the fourth quarter. T-Mobile's connected devices now total 2.1 million.

The company also said 9.1 million customers now use 3G/4G phones (defined as UMTS/HSPA/HSPA+ and HSPA+42 devices), which is an increase of about 1 million over the same quarter a year ago. T-Mobile said 3G/4G smartphone customers now make up 27 percent of its customers base, and 3G/4G phone sales accounted for more than 75 percent of the carrier's equipment sales revenue in the first quarter.

There was little mention of AT&T's (NYSE:T) planned $39 billion acquisition of T-Mobile, which was announced March 20, except for a note that the transaction is expected to close in the first half of 2012 if it meets regulatory approvals and other closing conditions.

"It's a very aggressive competitive marketplace ... and I have no reason to believe that transaction can't get approved," Höttges said of AT&T's proposed purchase, according to a Morningstar transcript of DT's quarterly conference call with investors.  

Here's a breakdown of T-Mobile's other key metrics for the quarter:

Postpaid subscribers: T-Mobile lost 99,000 net customers in the first quarter of 2011, far worse than net losses of 23,000 in the fourth quarter of 2010 and 77,000 in the first quarter of 2010. The carrier's contract net customers losses were 471,000 in the first quarter, also wider than the 318,000 net contract customers losses it posted in the fourth quarter of 2010.

Prepaid subscribers: T-Mobile's prepaid net customers additions, including MVNOs, were 372,000 in the first quarter, more than the 295,000 it recorded in the fourth quarter of 2010. The company said prepaid net customers adds increased in part due to the popularity of its prepaid monthly unlimited plans.

Connected devices: T-Mobile's connected device net customers adds were 192,000 in the first quarter, up from 113,000 in the fourth quarter of 2010. The carrier's connected devices now total 2.1 million.

Churn: T-Mobile's blended churn (including postpaid and prepaid subs) was 3.4 percent, down from 3.6 percent in the fourth quarter of 2010 and up from the 3.1 percent T-Mobile recorded in the first quarter of 2010. The carrier's postpaid churn was 2.4 percent in the first quarter, down from 2.5 percent in the fourth quarter.

ARPU: The carrier's average revenue per subscriber was $52 in the first quarter, consistent with the fourth quarter of 2010. T-Mobile's prepaid ARPU was $19 in the quarter, which was also consistent with the previous quarter.

Data ARPU: T-Mobile's data ARPU was $13.10 per customer, an increase of 28 percent over the fourth quarter. In addition, the carrier's data service revenues were $1.33 billion in the first quarter, up 20 percent over the first quarter of the previous year.

In other T-Mobile news, the blog TmoNews reported the company is rumored to be changing couple of its prepaid plans on May 22. Specifically, T-Mobile will add unlimited data to its $70 plan, which currently offers unlimited talk, text and 2 GB of data. In addition, T-Mobile's $50 prepaid plan that offers unlimited talk, text and 100 MB of data will switch to throttled data beyond 100 MB--rather than requiring a refill or purchase of a $1.49 day pass for 24 hours of Web access.    

For more:
- see this release
- see this Morningstar conference call transcript
- see this Cnet article
- see this Bloomberg report
- see this TmoNews article

Special Report: FierceWireless Q1 earnings page

Related Articles:
AT&T to buy T-Mobile USA for $39B
T-Mobile USA sheds 318K postpaid subscribers in Q4
T-Mobile charges back to subscriber growth in Q3
T-Mobile USA chief hopes to overtake Sprint by 2015
T-Mobile's Humm focuses on Android integration, tablets in turnaround

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