• August 4, 2011 01:28pm EST
• 1 Comment

T-Mobile Still Bleeding Customers, Though Losses Slowing

By Sara Yin

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T-Mobile, the country's fourth-largest carrier, lost 50,000 subscribers in the second quarter, though that was an improvement from the previous quarter when it lost 99,000 subscribers.

Continuing a 12-month trend of tiny gains in the prepaid market, T-Mobile's net subscriber base was completely offset by continued postpaid losses. T-Mobile added 231,000 prepaid subscribers between April and June 2011, but shed 281,000 lucrative postpaid subscribers.

As a result, its second quarter service revenue, which doesn't include equipment sales, remained unchanged from the first quarter at $4.6 billion. It is still down 1.7 percent from the year before when it reported $4.7 billion.

T-Mobile said it saw "significant increases" in customers adopting 3G and 4G smartphones, like the HTC Sensation 4G, Sidekick 4G, and Samsung Galaxy S 4G. Its base of smartphone subscribers increased two percentage points from the last quarter to 9.2 million, representing 29 percent of its total customer base. In total, T-Mobile now services 33.6 million customers, which is unchanged from the year before.

Although voice revenues were down, T-Mobile said it saw glimmers of hope from increased revenue streams coming from mobile broadband, unlimited texting, data, roaming fees, and unlimited plans.

"The United States remains a difficult market for Deutsche Telekom, but we see improvements compared to the first quarter of 2011. T-Mobile USA will continue its strategy with the extended HSPA+ 42 coverage and continued data growth," said René Obermann, CEO of Deutsche Telekom, T-Mobile's parent company.

Deutsche Telekom is also banking on the sale of its weakest link to AT&T for a cool $39 billion, if the proposed merger is approved by U.S. regulatory authorities. T-Mobile says it expects a response by early 2012.

"The loss of 281,000 of T-Mobile USA's contract customers in the 2nd quarter, which brings the total for the past year to nearly one million, is further evidence that the company's business model is not sustainable. The new results should help the case for the merger with AT&T. They reinforce the argument in the paper that consumers would not be worse off due to the merger since T-Mobile USA's viability as a long-term competitor is in serious jeopardy," said Allen Rosenfeld, senior vice president of M+R Strategic Services, who authored an AT&T-commissioned study that, not surprisingly, concluded that the merger would not lead to a duopoly between AT&T and Verizon.

Source:http://www.pcmag.com/article2/0,2817,2390432,00.asp?kc=PCRSS05039TX1K0000762