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Additions offset a troubling revenue drop, meager 500k iPhone 5 sales

Good news has been few and far between for Deutsche Telekom AG's (ETR:DTE) U.S. brand T-Mobile USA, but the company -- America's fourth largest cellular carrier -- received some such news in its Q1 2013 earnings report.  The "uncarrier" added 202,000 branded prepaid customers, which offset loss of 199,000 contract customers to make for a net gain of 3,000 branded customers.  The branded growth was the first T-Mobile has seen since Q1 2009.

T-Mobile is phasing out contracts and phone subsidies, and moving towards a monthly access charge model using unlocked, unsubsidized handsets.  The carrier posted an even bigger gain -- 579,000 customers -- when its other brands, such as the MVNO prepaid service, were factored in.  Postpaid (contract) customer churn (customer loss) was at 1.9 percent, the lowest level since Q2 2008.  And postpaid customer losses were down 61 percent on a year-to-year basis.

While T-Mobile USA appears to be righting the ship on the subscriber front, revenue wasn't such a pretty picture.  Average revenue per user (ARPU) for postpaid declined 6.3 percent.  ARPU for prepaid rose 11.3 percent, but was not enough to bridge the gap.  Overall T-Mobile's only pulled in a EBITDA (a profitability measure) of $1.2B USD, down 7.5 percent on a year-to-year basis.

T-Mobile wide

T-Mobile USA moved a relatively competitive 500,000 Apple, Inc. (AAPL) iPhone 5s in the first few weeks of availability.  Contrast that with rival carrier Sprint Nextel Corp. (S) which sold a mere 1.5 million iPhone 4s, 4Ss, and 5s during three whole months of Q1.  T-Mobile USA's iPhone sales rate is behind AT&T, Inc. (T) which sold 4.8 million units in Q1.

T-Mobile USA was recently involved in a rather complex merger deal --approved by U.S. federal regulators in March -- involves MetroPCS splitting its shares, then paying out $1.5B USD to shareholders (roughly half the market cap). This will dilute its stake by taking 74 percent of the resulting shares, while giving the combined company all of T-Mobile shares (meaning Deutsche Telekom AG (ETR:DTE) will no longer directly own T-Mobile USA).

There's a new rumor that Japan's fastest growing mobile carrier, Softbank Corp. (TYO:9984), is eyeing acquiring the resulting semi-independent T-Mobile USA and merging it with Sprint, if it can beat Dish Network Corp.'s (DISHrival bid for Sprint.  While Softbank has yet to even win the acquisition of Sprint, the potential plan to merge America's third and fourth largest carriers is drawing buzz.

Sources: T-Mobile, Seattle Times



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It's amazing when....
By EasyC on 5/9/2013 11:34:11 AM , Rating: 3
A carrier finally gets what customers want. T-Mobile figured out that the key to gaining customers is NOT ripping them off or continually finding subtle new ways to screw them out of benefits/service.

I switched from sprint. I pay 50$ a month for Unlimited calls/txts/2.5 GB of 4G with free hotspot.

Let's hope the other carriers follow suit and the market gets much more competitive. Way to go T-Mobile, thank you.




RE: It's amazing when....
By AlphaVirus on 5/10/2013 1:04:32 PM , Rating: 2
This is exactly what I love about T-Mobile, they are giving the customer what they want. They are getting out of the phone plus service business and into the service only business.

This allows a customer to buy a $150 Nokia Lumia off the street and spend $50 for unlimited everything. Cheap, reliable entry into the smartphone world.

A huge plus that you mentioned that most people don't notice is the free hotspot! Great addition to this revamped program.


Nice article, but confusing statement
By Sivar on 5/8/2013 3:42:48 PM , Rating: 2
quote:
... meager 500k iPhone 5 sales

quote:
T-Mobile USA moved a relatively competitive 500,000 Apple, Inc. (AAPL) iPhone 5s in the first few weeks of availability.




RE: Nice article, but confusing statement
By hughlle on 5/8/2013 3:48:06 PM , Rating: 2
Not really. They are two different things. Meager is in terms of the quantity of iphone 5's sold as a single figure, wheras relatively competitive is in terms of how many iphone 5's were sold compared to other carriers.


I am one of the 202k
By coolkev99 on 5/9/2013 7:14:01 AM , Rating: 2
Their new in-store plans are some of the most fair out there. Switched from ATT after having been with them since before the Cingular buyout.




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