T-Mobile USA sheds 318K postpaid subscribers in Q4

T-Mobile USA lost 318,000 postpaid subscribers in the fourth quarter--a figure that underscores the challenges facing CEO Philipp Humm as he embarks on a massive turnaround plan.

In a statement, Humm said he was pleased with the carrier's growth in service revenue, data ARPU and T-Mobile's HSPA+ network. "However, high-contract churn and significant contract customer losses in the fourth quarter of 2010 indicate that we still have a fair amount of work ahead of us and that any turnaround will take time," he said. "With the ongoing implementation of our challenger strategy, we are laying the foundation for improved performance going forward."

T-Mobile unveiled a turnaround strategy in January that rests on several key pillars, including reducing churn, increasing sales of cheaper smartphones based on Google's (NASDAQ:GOOG) Android platform and highlighting the company's HSPA+ network, which the company has said will be upgraded to HSPA+ 42 technology covering 140 million POPs by year-end. 

Deutsche Telekom, T-Mobile's parent company, reported a net loss of $803 million, compared with a net loss of $4.1 million in the year-ago period, largely due to write-downs of assets in Romania and Greece. T-Mobile USA made up a quarter of the German company's sales.

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

Subscribers: The carrier lost a net total of 23,000 subscribers in the quarter, compared with net additions of 371,000 in the fourth quarter of 2009. However, T-Mobile's postpaid subscriber losses of 318,000 were higher than the 117,000 net postpaid losses it had in the year-ago period. T-Mobile blamed the losses on fewer gross subscriber additions, driven by revised credit standards and competitive pressure. T-Mobile's prepaid net additions, including MVNO customers, were 295,000 in the quarter, down from 488,000 in the year-ago quarter. T-Mobile USA served 33.73 million customers at the end of the fourth quarter, down from 33.79 million at the end of the fourth quarter of 2009. 

"That is massive, it is becoming Sprint-esque," Michael Kovacocy, an analyst at Evolution Securities, told Bloomberg, referring to Sprint Nextel's (NYSE:S) subscriber losses following the merger of Sprint and Nextel. He noted that T-Mobile USA in the fourth quarter lost 10 times more subscribers than expected.

Financials: T-Mobile's net income fell to $268 million in the quarter, down from $306 million in the year-ago quarter. Service revenues clocked in at $4.69 billion, up from $4.65 billion in the fourth quarter of 2009. T-Mobile said service revenue growth was driven by the adoption of mobile broadband data plans, handset insurance services and prepaid unlimited plans. Total revenue came in at $5.36 billion, down from $5.41 billion in the year-ago quarter. 

Churn: Contract churn in the fourth quarter was 2.5 percent in the fourth quarter of 2010, up from 2.4 percent in the third quarter of 2010 and flat with the fourth quarter of 2009. Humm said in January that 10 percent of T-Mobile's churn is due to Apple's (NASDAQ:AAPL) iPhone. 

ARPU: Blended average revenue per user was $46 in the quarter, down from $47 in the third quarter and flat with the year-ago quarter.

Data: Data service revenues clocked in at $1.29 billion in the fourth quarter, up 25 percent from the fourth quarter of 2009. Data service revenues represented 28 percent of blended ARPU, or $12.80 per customer, up from 22 percent of blended ARPU, or $10.20 per customer, in the fourth quarter of 2009. T-Mobile said 8.2 million customers were using smartphones enabled for the company's UMTS/HSPA/HSPA+ network.

For more:
- see this FierceMobileContent article
- see this release
- see this FierceWireless Q4 earnings page

Related Articles:
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
T-Mobile's turnaround strategy has potential--and problems, too
T-Mobile CEO Humm unveils turnaround plan, says 10% of churn caused by iPhone

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