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T-Mobile Reports More Subscriber Losses

February 26, 2011

T-Mobile USA has continued to struggle, as subscribers of contract-based mobile phone plans with the company left their services in record numbers during the fourth quarter.

The No. 4 wireless carrier said on Friday it lost 318,000 subscribers on contract-based plans in the October-December period.

T-Mobile’s larger rivals — AT&T, Verizon Wireless and Sprint Nextel — all added contract-based subscribers during the period. For Sprint, it was a gain after many years of losses.

T-Mobile said its losses were largely due to competition and to revised credit standards for customers.

Philipp Humm, T-Mobile USA’s new CEO, said the company made up for the losses by selling wholesale access to its network to resellers, which means overall, it only lost 23,000 subscribers in the quarter. But wholesale subscribers do not bring near as much revenue in.

T-Mobile has orders from its parent company, Deutsche Telekom AG, to stem the loss of subscribers and increase revenue by 2014, said Humm.

The percentage of contract-based subscribers leaving T-Mobile every month was 2.5 percent for the quarter, roughly the same as a year ago, but noticeably higher than in previous 2010 quarters.

Deutsche Telekom CEO Rene Obermann told The Associated Press that even a loss rate of 2.3 percent is “just not acceptable,” and the goal is to reduce it to 1.8 percent by next year. That would bring T-Mobile more in line with competitors. Verizon Wireless has a churn rate of 1 percent.

Including prepaid customers, churn was 3.6 percent at T-Mobile, the highest it has been in at least 7 years. T-Mobile ended the quarter with 33.7 million subscribers. Its fourth-quarter revenue declined 1 percent from the same time last year to $5.36 billion. The quarter’s net income fell 12 percent to $268 million from the previous year and was the lowest quarterly profit in four years.

“Churn” is the term mobile phone companies use to measure the percentage of subscribers leaving their contracts.

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