T-Mobile punished by lack of iPhone 4S, as customer losses mount in Q4

T-Mobile USA continues to face difficulties keeping its customers. The company reported weak fourth quarter earnings highlighted by a loss of a net 802,000 postpaid subscribers in the quarter. The losses most likely were due to customers leaving the carrier to go to competitors such as AT&T Mobility (NYSE:T), Verizon Wireless (NYSE:VZ) and Sprint Nextel (NYSE:S), which all launched Apple's (NASDAQ:AAPL) iPhone 4S in fourth quarter.

The company tried to draw attention away from its poor quarterly earnings by touting the fact that it will be launching LTE in its AWS spectrum in 2013. (See related article here.) 

In addition, CEO Phillip Humm outlined a four-pronged plan to rebuild the company in 2012 that includes spending $200 million in advertising to relaunch the T-Mobile brand in the third quarter; modernizing T-Mobile's network with the launch of LTE via spectrum refarming; increasing distribution by launching an MVNO-enabler (MVNE) platform that will make it easier for MVNOs to sign up for T-Mobile service; and expanding T-Mobile's business-to-business sales force by adding 1,000 new sales reps and new rate plans. "T-Mobile is back with the challenger strategy," Humm said.

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

Postpaid subscribers: T-Mobile lost a net 802,000 postpaid subscribers in the fourth quarter, way bigger than the 186,000 net contract customer losses it reported in the third quarter and the 251,000 net postpaid losses in the fourth quarter of 2010. Branded contract net customer losses, excluding connected devices, were 706,000 in the fourth quarter of 2011, steeper than in the third quarter and the year-ago quarter. T-Mobile said that the iPhone launch as well as competitive pressures and the implementation of strengthened credit standards increased its losses. The company also lost 95,000 connected device customers in the quarter, and ended the fourth quarter with 33.2 million total customers. 

Prepaid subscribers: Prepaid net subscriber additions, including MVNO customers, were 276,000 in the fourth quarter, down from 312,000 net prepaid customer additions in the third quarter, and up from 229,000 net prepaid additions in the fourth quarter of 2010. Branded prepaid net customer additions, excluding MVNO customers, were 220,000 in the fourth quarter, down from 254,000 in the third quarter but up from 145,000 net branded prepaid customer losses in the year-ago period. 

Churn: Blended churn, reflecting both postpaid and prepaid customers, increased to 4 percent in the fourth quarter, up from 3.5 percent in the third quarter and 3.6 percent in the year-ago period. The increase in blended churn was primarily driven by higher churn from branded contract and connected device customers, T-Mobile said. Postpaid churn, including connected devices, was 3.1 percent in the fourth quarter, up from 2.4 percent in the third quarter and 2.5 percent in the year-ago period. Prepaid churn, including MVNOs, decreased to 6.8 percent in the fourth quarter of 2011, from 7.2 percent in the third quarter and 7.5 percent in the fourth quarter of 2010.

ARPU: The company's average revenue per user was $53 in the fourth quarter, flat from the third quarter and up from $52 in the year-ago quarter. Prepaid ARPU was $19, up from $18 in the third quarter and flat from a year ago. 

Data: T-Mobile's data service revenues clocked in a $1.4 billion in the fourth quarter, up 9.9 percent from the fourth quarter of 2010. Data service revenues represented 31 percent of blended ARPU, or $14.20 per customer, compared to 30 percent of blended ARPU, or $14 per customer in the third quarter, and 28 percent of blended ARPU, or $12.80 per customer in the fourth quarter of 2010.

Financials: Total revenues were $5.2 billion in the fourth quarter of 2011, flat with the third quarter and down from $5.4 billion in the fourth quarter of 2010. Service revenues came in at $4.57 billion in the quarter, down from $4.67 billion in the third quarter and $4.69 billion in the fourth quarter of 2010.

For more:
- see this release
- see this Reuters article
- see this WSJ article (sub. req.)
- see this Bloomberg article

Special Report: Wireless in the fourth quarter of 2011

Related Articles:
T-Mobile adds 126K subs in Q3, banks on prepaid 
Humm: T-Mobile is back and in fighting shape
T-Mobile gets 7-year roaming deal, AWS spectrum as part of AT&T/T-Mobile breakup fee 
AT&T pulls the plug on $39B acquisition of T-Mobile USA

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