All yours, AT&T: T-Mobile profits, customers declining amid ‘ongoing challenges’

It’s a good thing AT&T is so interested in adding network capacity through its proposed acquisition of T-Mobile USA, because the customer base might not be the same by the time regulators get around to approving the $39 billion deal, assuming they ultimately do.

Deutsche Telekom, the parent company of Bellevue-based wireless company, reported as part of its quarterly earnings this morning that T-Mobile USA “continues to face some major challenges.” Among them: A 2.4 percent churn rate resulting in a drop of 471,000 contract customers in the first quarter, and a decline of 14.5 percent in earnings (before interest, taxes, depreciation and amortization) to $1.2 billion.

Overall, counting growth in prepaid customers, T-Mobile USA’s customer base declined by 99,000 from the end of 2010 to 33.6 million, according to the company.

DT blamed the lackluster T-Mobile USA financial results on “higher market investment and network costs” and vowed to keep fighting the good fight while the sale to AT&T is still pending.

Notwithstanding the announced sale of T‑Mobile USA, the company will continue to pursue its strategy as an aggressive competitor on the market until the transaction has been closed. The “Grow” and “Reinvent” growth and efficiency programs announced in January are being implemented as planned.

The focus on attractive rate plans and smartphones, as well as outstanding network quality, is starting to pay off. Data revenue per user in the first quarter rose by more than 20 percent year-on-year to USD 13.10. In the same period, average total revenue per contract user climbed from USD 52 to USD 53. The first quarter saw growth of just under one million additional customers using 3G and 4G smartphones in the T‑Mobile USA network, boosting the total to 9.1 million.

The proposed sale to AT&T was announced March 20. In an email to employees at the time, T-Mobile USA CEO Philipp Humm called the acquisition ““the best possible solution for our business and for our customers.”

(Via Associated Press and CNet News.com)

  • Anonymous

    Correct me if I’m wrong here, but to blame a lacklustre performance on a highly competitive wireless market, can only mean that you’re not being competitive? And here was me listening to the en masse populace crying about the loss of a competitor, and about the emerging doom that TMO’s demise would surely bring on – what utter nonsense.

    T-mobile’s recent attempt at becoming more competitive, the altering of their prepaid unlimited offering, has also to a large extent exposed them to me, as being daylight robbers. Here’s a company who claims to have the problem of being sorta-in-the-middle, and charge people $70 for an unlimited plan, when there are players in the market like tracfone, who charge almost half that amount. And the avarage being slightly more than that – is their 4G that much worth it?