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T-Mobile USA CEO Philipp Humm says the loss of customers is due to the lack of an iPhone 4S to sell

T-Mobile was hit pretty hard in fourth quarter 2011 with the loss of over 700,000 customers, which was attributed to the fact that T-Mobile is the only carrier that doesn't offer the iPhone 4S.

T-Mobile is trailing behind the United States' three largest mobile carriers, Verizon, AT&T and Sprint. All three of these carriers sell the iPhone 4S, but T-Mobile does not. According to Philipp Humm, T-Mobile USA CEO, this is the reason for many of the contract deactivations in Q4 2011.

By the end of Q4 2011, T-Mobile had 33.2 million customers, which is a decrease from the 33.7 million customers it had at the end of Q3 2011. The carrier lost 706,000 customers total.

T-Mobile has wanted to carry the iPhone 4S in order to stay competitive for some time now, but Apple executives have a problem with the spectrum band which T-Mobile's network operates in.

In addition to iPhone-related woes, T-Mobile USA reported service revenues of $4.57 billion in Q4 2011, which is a decrease from $4.69 billion in Q4 2010. Also, net customer losses were 526,000 in Q4 2011, which is an increase from 23,000 in Q4 2010.

Despite some disappointment, T-Mobile highlighted a few positives from the Q4 2011 results, such as an adjusted OIBDA increase of 4.3 percent year-on-year to $1.4 billion.

“In 2011, T-Mobile USA showed solid financial performance with a remarkable adjusted OIBDA turn-around in the second half of the year, despite nine challenging months during the pending acquisition. We further increased our 4G data speed to 42 Mbps, expanded our sales channels, launched 25 new 4G handsets and significantly improved our operational efficiency. As a result, adjusted OIBDA rose again year-on-year in the fourth quarter of 2011 and branded data ARPU grew 20 percent year-on-year as smartphone adoption accelerated,” said Humm. “However, not carrying the iPhone led to a significant increase in contract deactivations in the fourth quarter of 2011.  In 2012 and 2013, T-Mobile USA will invest to get the business back to growth, including an incremental $1.4 billion investment in its network modernization initiative, which will total a $4 billion investment over time.”

T-Mobile also mentioned that it will finally be rolling out a LTE network, which Verizon, AT&T and Sprint have either launched or are preparing to launch. T-Mobile's LTE network will be built using the $1 billion worth of spectrum and $3 billion in cash from the failed AT&T merger agreement, where AT&T wanted to acquire T-Mobile for $39 billion last year. However, the Federal Communications Commission (FCC) and the Department of Justice had an issue with anti-competitive practices.

T-Mobile's LTE network is expected to begin development in 2013.

AT&T and Verizon will be ahead of the curve as far as both LTE and Apple products go, since the iPad 3, which will be revealed at an event next week, will run on both of the carriers' LTE networks.

“Though we are not satisfied with the contract customer losses and the decreased total revenues, the quarterly margin improvement year-on-year was impressive," said René Obermann, CEO of Deutsche Telekom. "The spectrum gained through the break-up fee empowers T-Mobile USA to start LTE-based services in key US markets and strengthens its competitiveness."

Source: T-Mobile

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By sprockkets on 2/23/2012 6:01:45 PM , Rating: 2
Who cares about those 700k customers you lost due to the iphone? Every carrier that offers it barely makes any money off of it to loses money since apple forces them to sell it for $200 even though the phone is $600.

Just look at Verizon and Sprint and what they are going through due to offering the iphone.

RE: so
By TakinYourPoints on 2/23/2012 6:45:30 PM , Rating: 3
This is common practice, most high end smartphones cost around that much and are also sold for $200. Way before the iPhone came out you'd be paying at least $600 for an unlocked top of the line Palm or Blackberry.

The first Google result for an unlocked Galaxy S II, $590 on Amazon, marked down from $900. T-Mobile sells it starting at $230 with 2 year contract:

An unlocked Galaxy Note is around $700 unlocked and sells with contract for $300.

About the only place carriers aren't hit as hard are lower end smartphones or Blackberry devices which seem to be less expensive across the board. Then again those also cost less for the customer or are given away for free with a contract.

It appears that AT&T/Verizon/Sprint are getting squeezed because all they can sell from Apple are the highest end devices, even with the iPhone 4 and 3GS as >$100 or free options.

I haven't done any sort of breakdown, but are lower end devices more profitable for cell carriers? I know that they push Android over iOS or WP7, presumably because of greater availability and (presumably) profit on cheaper devices. Android has a lot of phones in the low end. Then again, I don't have enough information to make assumptions there, so I'm curious.

RE: so
By sprockkets on 2/23/2012 8:08:43 PM , Rating: 3
Not sure. But the conspiracy theorists seem to think that Android rarely gets updated because of the carriers wanting to sell more hardware.

Either you are Android doing what you can to sell phones, WP7 trying to keep it clean but with no carrier support since they want more control, and Apple who knows the world is their b1tch and can squeeze profit from everyone but themselves and get away with it.

RE: so
By TakinYourPoints on 2/23/2012 8:41:05 PM , Rating: 1
On the subject of carrier control, the Apple and Microsoft approach is the best for consumers. It is a shame that carriers are burying WP7 at the expense of Android because of the amount of control that Microsoft wants, which is pretty much the same level of control Apple that gets.

The amount of control carriers and hardware manufacturers have over Android is one of my main issues with it, and it is a big reason why carriers love/push it. The fact that a phone that is well within a two year contract period does not get a major OS update is weak. Even the flagship Droid X from a year ago isn't getting official ICS support, while an iPhone 3GS from 2009 runs iOS 5 and an original WP7 device from 2010 runs 7.5.

RE: so
By mcnabney on 2/24/2012 9:31:43 AM , Rating: 3
That is more about the manufacturers not keeping their devices updated, not the carriers.

RE: so
By TakinYourPoints on 2/24/2012 1:17:55 PM , Rating: 2
Got it. The point still stands, inconsistent OS upgrades are bad for consumers.

RE: so
By MScrip on 2/24/2012 4:07:49 AM , Rating: 2
Every carrier that offers it barely makes any money off of it to loses money since apple forces them to sell it for $200 even though the phone is $600.

True... but the carrier also makes $80 a month for 24 months.

They might lose $400 on the phone itself... but they end up netting $1600 with service fees over the life of the contract.

Carriers are in business to sell service plans... not hardware.

BTW... most subsidized smartphones are around $600 but sold for $200.

I've read plenty of articles in the past few days saying "Carriers lose money on the iPhone"

I simply don't believe it... not when they charge $30 for 2GB of data and $20 for unlimited texting.

Texts are the biggest scam of all... since they piggyback on top of other services and use hardly any resources at all.

So... the iPhone might cost the carriers a little more money in the beginning... but all smartphones make the same money month after month thanks to those expensive service plans.

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