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We've already seen AT&T, Verizon, and Sprint share their first quarter 2011 financial results, and today T-Mobile rounded out the big four by announcing their numbers as well. During Q1 2011, T-Mobile added 372,000 prepaid customers thanks in part to the popularity of unlimited prepaid plans, but ended up losing 471,000 contract customers. That means that T-Mo lost a total of 99,000 customers, quite a bit more than the 23,000 total loss in Q4 2010, bringing them to a total customer base of 33.63 million at the end of the first quarter, which is down from 33.73 million at the end of the fourth quarter of last year. Blended churn actually fell for T-Mo in Q1 2011, though, falling from 3.6 percent in Q4 2010 to 3.4 percent in Q1 2011. At the end of March, T-Mobile had 9.1 million customers using 3G/4G smartphones and covered 200 million people in 170 markets with 4G coverage. Finally, you know that T-Mo couldn't talk numbers without mentioning its deal with AT&T; here's what René Obermann, CEO of Deutsche Telekom, had to say:

“The first quarter shows a mixed picture with positive trends in the development of data ARPU. Our deal with AT&T announced a few weeks ago will not change the focus of our US business. Until the closing of the deal, T-Mobile will continue to challenge its competitors and compete aggressively in the US market."

So all in all, Q1 2011 wasn't really an amazing quarter for T-Mobile. It's good to know that Magenta will continue to be aggressive and build out its 4G network even during the AT&T-Mobile approval process, though, especially for those customers that continue to stick by it. For those of you interested in reading the full report from T-Mobile, you can find part of it below, and the whole thing is available right here.

T-Mobile USA Reports First Quarter 2011 Results

Service revenues in the first quarter of 2011 at $4.63 billion, consistent with the first quarter of 2010

Contract ARPU $52 in the first quarter of 2011, up from $51 in the first quarter of 2010

Blended data ARPU of $13.10 in the first quarter of 2011, up more than 20% from the first quarter of 2010

9.1 million customers using 3G/4G smartphones as of the first quarter, a net increase of nearly 1 million customers in the first quarter of 2011

OIBDA of $1.19 billion in the first quarter of 2011, down from $1.39 billion in the first quarter of 2010 driven primarily by investment in customer loyalty initiatives and customers upgrading to smartphones

America’s largest 4G network currently covers over 200 million people in 170 markets; the network is being upgraded to even faster speeds (42 Mbps); these faster speeds will cover more than 140 million people by mid-2011, with the first markets already launched

BELLEVUE, Wash.--(BUSINESS WIRE)--T-Mobile USA, Inc. (“T-Mobile USA”) today reported first quarter of 2011 results. In the first quarter of 2011, T-Mobile USA reported service revenues of $4.63 billion, consistent with the first quarter of 2010, and OIBDA of $1.19 billion, compared to $1.39 billion reported in the first quarter of 2010. The number of customers using smartphones continued to increase significantly during the quarter, driving growth in blended data ARPU. Blended data ARPU in the first quarter of 2011 was $13.10, up more than 20% from the first quarter of 2010. Net customer losses were 99,000 in the first quarter of 2011 compared to 77,000 net customer losses in the first quarter of 2010.

“The loaded T-Mobile G2x with Google is the fastest, smoothest Android smartphone available today.”
“We continue to drive our strategy and lay the foundation for improved future performance and have seen some positive trends in the quarter as evidenced through data ARPU growth rates,” said Philipp Humm, President and CEO of T-Mobile USA. “The success in our data business has been driven by our 4G network message, our compelling 4G device offerings and our attractive data plans; however, we still have challenges facing our business as evidenced by high contract churn and contract customer losses in the first quarter of 2011.”

“The first quarter shows a mixed picture with positive trends in the development of data ARPU. Our deal with AT&T announced a few weeks ago will not change the focus of our US business. Until the closing of the deal, T-Mobile will continue to challenge its competitors and compete aggressively in the US market,” said René Obermann, CEO of Deutsche Telekom.

Customers

T-Mobile USA served 33.63 million customers (as defined in Note 3 to the Selected Data, below) at the end of the first quarter of 2011, down from 33.73 million at the end of the fourth quarter of 2010 and 33.71 million at the end of the first quarter of 2010.

In the first quarter of 2011, net customer losses were 99,000, compared to net losses of 23,000 in the fourth quarter of 2010 and 77,000 in the first quarter of 2010.

Contract customer losses were the primary driver for the sequential and year-on-year change in net customers.

Contract net customer losses were 471,000 in the first quarter of 2011, compared to 318,000 net contract customer losses in the fourth quarter of 2010, and 118,000 net contract customer losses in the first quarter of 2010.

Sequentially and year-on-year, the decline in net contract customers was driven primarily by fewer contract gross customer additions and continued high contract churn due to competitive pressures.

Connected device net customer additions, included within contract customers (as defined in Note 3 to the Selected Data, below), were 192,000 in the first quarter of 2011 compared to 113,000 in the fourth quarter of 2010 and 165,000 in the first quarter of 2010. Connected devices totaled 2.1 million at March 31, 2011.

Prepaid net customer additions, including MVNO customers (as defined in Note 3 to the Selected Data, below), were 372,000 in the first quarter of 2011, compared to 295,000 in the fourth quarter of 2010 and 41,000 in the first quarter of 2010.

Sequentially and year-on-year, prepaid net customer additions increased due in part to the growth in customers purchasing prepaid monthly unlimited plans.

MVNO customers continued to grow, totaling 3.2 million at March 31, 2011, and made up a significant portion of net prepaid customer additions in the first quarter of 2011.

Churn

Blended churn (as defined in Note 2 to the Selected Data, below), including both contract and prepaid customers, was 3.4% in the first quarter of 2011, compared to 3.6% in the fourth quarter of 2010 and 3.1% in the first quarter of 2010.

The sequential decrease in blended churn was driven primarily by seasonally higher churn in the fourth quarter of 2010 due to the holiday season, as in previous years.

Year-on-year, the increase in blended churn was driven primarily by higher contract customer churn.

Contract churn was 2.4% in the first quarter of 2011, down from 2.5% in the fourth quarter of 2010, but up from 2.2% the first quarter of 2010.

The year-on-year increase in contract churn was driven by continued competitive pressures in the US wireless industry.

Prepaid churn decreased in the first quarter of 2011 to 6.7% from 7.5% in the fourth quarter of 2010 and 6.8% in the first quarter of 2010.

The sequential and year-on-year decrease in prepaid churn was driven primarily by lower branded prepaid churn resulting from the growth in prepaid monthly unlimited customers.

OIBDA and Net Income

T-Mobile USA reported OIBDA (as defined in Note 6 to the Selected Data, below) of $1.19 billion in the first quarter of 2011, compared to $1.34 billion in the fourth quarter of 2010 and $1.39 billion in the first quarter of 2010.

Sequentially and year-on-year, OIBDA fell due to increased investment in customer loyalty initiatives and customers upgrading to smartphones (as defined in Note 11 to the Selected Data, below).

Additionally, OIBDA decreased in the first quarter of 2011 as a result of higher operating expenses for advertising and the continued expansion of our 4G network.

OIBDA margin (as defined in Note 7 to the Selected Data, below) was 26% in the first quarter of 2011, down from 29% in the fourth quarter of 2010 and 30% in the first quarter of 2010.

Net income in the first quarter of 2011 was $135 million, compared to $268 million in the fourth quarter of 2010 and $362 million in the first quarter of 2010.

Sequentially and year-on-year, net income decreased due primarily to higher retention equipment subsidies related to customer loyalty initiatives and customers upgrading to smartphones, as described above. In addition, compared to the first quarter of 2010, depreciation expense increased $84 million due primarily to continued investment in our network.

Revenue

Service revenues (as defined in Note 1 to the Selected Data, below) were $4.63 billion in the first quarter of 2011, down from $4.69 billion in the fourth quarter of 2010 and consistent with $4.63 billion in the first quarter of 2010.

Service revenues in the first quarter of 2011 were positively impacted by data revenue growth, driven by the adoption of mobile broadband data plans, the revenue contribution from providing handset insurance services (which commenced in the fourth quarter of 2010), and higher prepaid revenues from the growth of monthly unlimited plans. These revenue growth drivers were more than offset, compared to the fourth quarter of 2010, by voice revenue declines related to net losses of branded customers.

Year-on-year, quarterly service revenues were consistent due primarily to data revenue growth and from directly providing handset insurance services which offset voice revenue declines.

Total revenues, including service, equipment, and other revenues were $5.16 billion in the first quarter of 2011, down from $5.36 billion in the fourth quarter of 2010 and $5.28 billion in the first quarter of 2010.

Equipment revenues decreased sequentially and year-on-year due primarily to lower handset sales volumes.

ARPU

Blended Average Revenue Per User (“ARPU” as defined in Note 1 to the Selected Data, below) was $46 in the first quarter of 2011, consistent with the fourth quarter of 2010 and first quarter of 2010.

Contract ARPU was $52 in the first quarter of 2011, consistent with the fourth quarter of 2010 and up from $51 in the first quarter of 2010.

Year-on-year contract ARPU increased as data revenue growth and handset insurance revenues more than offset lower voice revenue.

Prepaid ARPU was $19 in the first quarter of 2011, consistent with the fourth quarter of 2010 and up from $18 in the first quarter of 2010.

Data service revenues (as defined in Note 1 to the Selected Data, below) were $1.33 billion in the first quarter of 2011, up 20% from the first quarter of 2010. Data service revenues in the first quarter of 2011 represented 29% of blended ARPU, or $13.10 per customer, up from 28% of blended ARPU, or $12.80 per customer in the fourth quarter of 2010, and 24% of blended ARPU, or $10.90 per customer in the first quarter of 2010.

9.1 million customers were using smartphones enabled for the T-Mobile USA 3G/4G network (as defined in Note 11 to the Selected Data, below) such as the T-Mobile® myTouch® 4G, T-Mobile® G2® with Google™, and the Samsung Galaxy S™ 4G at the end of the first quarter of 2011. This was a net increase of 11% or nearly 1 million customers using smartphones from the fourth quarter of 2010.

3G/4G smartphone customers now account for 27% of total customers, up from 24% in the fourth quarter of 2010 and over 15% in the first quarter of 2010. In addition, 3G/4G smartphones accounted for over 75% of equipment sales revenue in the first quarter of 2011 and fourth quarter of 2010.

In the first quarter of 2011, the increase in the number of customers using smartphones and the continued upgrade of the network were driving Internet access revenue growth with the increasing adoption of mobile broadband data plans.

CPGA and CCPU

The average cost of acquiring a customer, Cost Per Gross Add (“CPGA” as defined in Note 5 to the Selected Data, below) was $300 in the first quarter of 2011, up from $290 in the fourth quarter of 2010 but down from $310 in the first quarter of 2010.

Sequentially, CPGA increased in the first quarter of 2011 due primarily to higher marketing costs associated with advertising our 4G network and strong device lineup.

Compared to the first quarter of 2010, CPGA decreased due primarily to lower commission expense and a shift in customer additions toward MVNO customers and connected devices.

The average cash cost of serving customers, Cash Cost Per User (“CCPU” as defined in Note 4 to the Selected Data, below), was $25 per customer per month in the first quarter of 2011, up from $24 in the fourth quarter of 2010 and $23 in the first quarter of 2010.

The sequential and year-on-year CCPU increase was due primarily to a higher equipment subsidy loss from customer loyalty promotions and programs. Additionally, the equipment subsidy loss increased due to customers upgrading to smartphones and the cost of directly providing handset insurance services.

Capital Expenditures

Cash capital expenditures (as defined in Note 8 to the Selected Data, below) were $749 million in the first quarter of 2011, compared to $828 million in the fourth quarter of 2010 and $666 million in the first quarter of 2010.

Sequentially, the decrease in cash capital expenditures was a result of lower network capital expenditures partially offset by payment timing differences.

Compared to the first quarter of 2010, cash capital expenditures increased due primarily to network coverage expansion and the upgrade to HSPA+ 42, which will double the theoretical download speed of T-Mobile USA’s 4G network.

To further boost the value provided to customers through its 4G mobile broadband network, T-Mobile USA is doubling the speed of its 4G network in 2011 to achieve theoretical download speeds of 42 Mbps. T-Mobile USA customers in Las Vegas, New York and Orlando were the first in the USA to experience the increased 4G speeds, followed closely by Chicago and further expansion of the New York network into Long Island, NY, and Northern New Jersey. By mid-2011, T-Mobile USA expects more than 140 million Americans in over 25 markets to have access to these increased 4G speeds.

T-Mobile USA currently offers its customers America’s largest 4G network with HSPA+ service available in 170 markets reaching over 200 million people.

T-Mobile USA Recent Highlights

On March 20 2011, Deutsche Telekom AG and AT&T Inc. entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash and stock transaction valued at approximately $39 billion, subject to adjustment in accordance with the agreement. The agreement has been approved by the Board of Directors of both companies, and is expected to provide an optimal combination of network assets to add capacity and provide an opportunity to improve network quality in the near term for the customers of both companies. In particular, the transaction is important to address spectrum constraints and gives T-Mobile USA customers a clear path to take advantage of new generation LTE (Long Term Evolution) services. The transaction is expected to close in the first half of 2012, subject to regulatory approvals and other closing conditions. As part of the transaction, Deutsche Telekom will receive an equity stake in AT&T that, based on the terms of the agreement, would give Deutsche Telekom an ownership interest in AT&T of approximately 8 percent and one seat on the AT&T Board of Directors.

In the first quarter of 2011, T-Mobile unveiled a broad lineup of leading devices including the new Dell™ Streak™ 7 – the first 4G tablet in the U.S., the Galaxy S™ 4G – the fastest 4G smartphone running on America’s Largest 4G network, the T-Mobile myTouch® 4G, the T-Mobile G2® with Google™, and mobile broadband products such as the Rocket™ 2.0 Laptop Stick and the Dell™ Inspiron™ Mini 10 4G netbook. In addition, T-Mobile recently launched the T-Mobile Sidekick® 4G™ by Samsung, the T-Mobile G2x™ with Google™ by LG, and the T-Mobile G-Slate™ with Google™ by LG.

On January 6, 2011, at the 2011 International Consumer Electronics Show, T-Mobile USA President and CEO Philipp Humm highlighted the company’s network leadership, supported by Nielsen data confirming that T-Mobile USA delivered on average the fastest wireless data performance in the top 100 U.S. markets during the second half of 2010.

On January 6, 2011, T-Mobile USA Chief Operations Officer Jim Alling announced a new structure for T-Mobile USA’s field teams designed to shift business responsibility and accountability closer to customers. Twenty-three geographic regions will each be led by a Vice President General Manager (VP GM) with full profit and loss accountability. Each VP GM will have direct responsibility for all sales across all channels in a region, including business sales.

On March 16, 2011, T-Mobile USA was recognized by the Ethisphere Institute as one of the 2011 World’s Most Ethical Companies, which marks the third consecutive year that T-Mobile USA has received this distinction. This is a significant achievement and recognition of the compliance/ethics/governance program at T-Mobile USA, showing commitment to ethical leadership and corporate social responsibility. T-Mobile USA was also the only US wireless telecommunication service provider listed this year.

On April 26, 2011, T-Mobile USA's G2x with Google by LG was named the best Android smartphone in America by PC Magazine. According to the publication, “The loaded T-Mobile G2x with Google is the fastest, smoothest Android smartphone available today.”

T-Mobile USA is the U.S. wireless operation of Deutsche Telekom AG (OTCQX: DTEGY). In order to provide comparability with the results of other US wireless carriers, all financial amounts are in US dollars and are based on accounting principles generally accepted in the United States (“GAAP”). T-Mobile USA results are included in the consolidated results of Deutsche Telekom, but differ from the information contained herein as Deutsche Telekom reports financial results in Euros and in accordance with International Financial Reporting Standards (IFRS).

This press release includes non-GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations from the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below following Selected Data and the financial statements.


Via TmoNews


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Comments & discussions  

62 Reactions to this post

"With T-Mobile losing customers, does the AT&T buyout make more sense?"


Please limit your reaction to 140 characters or use comments for a longer reply :)
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Eduardo Colon Yeah, and if they do switch up the prices, let's hope it's improvement instead of injecting us with venum.
Justin Marden Jenny is absolutely right here. AT&T is BUYING tmobile, not destroying them. The destruction of tmobile might occur as a result of the buyout and AT&T's crappy record of terrible customer service, but that's not the point. Either way, tmobile is losing customers because of this proposed deal. They don't want to become AT&T customers, so they're jumping ship to the other carriers.
Jenny Diaz-Jimenez Att has to realize that they are winning over tmobile customers and try to keep them. I dont think theyre dumb enough to change eveything around, bring up the rates, and piss off all the current tmobile customers. They are "buying" tmobile not dropping them.
Scott Threet Sr. Att t-moblie sprint all bite it....CAN YA HERE ME NOW. RULE THE AIR..VERIZON#1
Sunny Patel No I love t mobiles customer service, and there plans are cheeper
Xerxes Irani Stuck in a contract but have my cricket wireless phone as a back up $35 unlimited nationwide talk n text cant beat it.
William L Wells Thts why they have lost so many customers tm customers do not wnt to go to ATT
Sambo Chao att left a bad skid mark on my undy and i will not forget lol
Sambo Chao i will never go with att...unless the other carriers are worse
Justin Marden Let's put it this way.. Tmobile was ranked #1 in customer service by J.D. Power & Associates 3 years in a row. AT&T was not. Need I say more? AT&T is known for its crappy customer service and lack of unlimited plans. Hey AT&T, Unlimited > Rollover. 'Nuff said. As for me, I'm staying with Tmobile until the end. If the deal passes the FCC, I'll jump ship to Sprint. I'm not giving up on Magenta just yet.
Brandon Cote I'll be leaving if the deal goes through. I hate AT&T.
Stuart James Baucum my dad left T-Mobile for Sprint and I left TracFone Wireless for Sprint too....basically my dad and I are on a 2-line $99 family plan :)
Ally I LOVED tmobile, jumped ship the day the merger was announced!!! At&t will never have me as a customer EVER again. As a result tmobile's customer service has already started getting worse... beware.
Edd Yee tmobile has better plans. att sux.
Daniel Arenas ATT sucks! T-MOBILE rocks but jumping ship unless things change for the better
Henry Van the buyout is the reason they're losing customers. when rumors surged, it could only mean bad things for t-mobile. at&t coverage sucks, too many dropped calls, poor customer service, expensive plans, no unlimited data, locked down devices. if the fcc knows what's good for them, they won't allow this to happen.
Tim Fuhrmann They are going to keep losing customers so long as the merger remains a possibility.
Francis San Pedro "loosing customers"? Didn't know they were so tight.
Don Ducharme No it doesn't. If anything, if it doesn't go through T-Mobile stands to gain a great deal that can help boost it in both money and spectrum.
J Litz Van Julius, the reason at&t has a cap on their dsl download speed is because. There are some city laws that regulate the speed based on amount of customers in an area. I have at&t for my internet & I'm in Chicago. Here, there must be a certain amount of customers in order to get a higher download speed. It's not at&ts fault. It's just how they're regulated.
Julius Ray Washington AT&T is capping there DSL.. for what reason, I don't know. I move to T-Mobile because of there phones. Now I hate that I left sprint.
Mike Jackson At&t sucks. Over priced for less service. Ill most likely leave when it takes place
Jose Pablo Islas The att buy out is why they are loosing customers
Zach Cline T-mobile sucks.
Justin Young At&t was once the only carrier and soon will be again
Walter Manuel Bonilla Just like most of you... I've been with t-mobile since i got my first phone. Now that they got this stupid deal Im moving out... Probably to Verizon.
Ed Covert Saying*, is*. F'n swype.
Ed Covert For all of you dating the AT&T deal of the reason for the subscriber loss how do you account for Q3 and Q4 of '10, well before there was even speculation? These subscriber losses are the cause of the deal, not the effect.
Manny Diaz Whoever say that at&t is the better company all imma say is ur DUMBASS n u should be shot smh
Aaron Couts If at&t wasn't buying them they would probably have more customers, a lot of their customers left at&t so why would they want to go back?
Dwight L. Burton Phone dog. You're questions are regarded at times.
Tamara Purnell Regan I like at&t and I ave my service with them. Maybe people are just leaving TMobile because their service coverage is not as good.
Mike Jordan @ Josh Rankin but you have to think tmobile doesnt have all that great coverage throughout the nation the top 2 coverage wise are verzion and att so does customer service really make up for the lack of coverage?
Bryan Winters Tmo lost customers because they fell behind in offering top tier phones last year. The Vibrant was the only (true) choice for most of 2010. Finally the G2 and Mytouch 4G came out at the end of the year but by that time it was too late. Hell I almost jumped ship, if it wasn't for the G2!
David Kimball More towers means improvement on the service that most iPhone dwellers are on.
Rick Wallace AT&T sucks. They did away with their unlimited data, and are trying to rip people off. Knowing that now a days people use the internet more then ever. So if you go over your data plan, you better be willing to pay an arm and a leg. If T-Mobile does away with theirs, then I will just go to Boost mobile which offers it.
Rafa J. Torres we are doom, I think to jump off the ship too...
Anh-Tuan Le An AT&T buyout never makes sense to anybody.
Tommy D Thompson Tmo have been losing customers since way before the merger was announced. The merger probably doesn't help, but its not the only reason. Does the merge make sense? Yes and no. What it does for AT&T would be good, what it would do to customers and pricing would be bad.
Fonzy Paniagua At&t is crap with their data caps and crappy customer service if buy out does happen I'm moving to sprint i think it's better than att and t-mobile? Had them before i moved to T-Mobile never had a single problem with coverage. But ya they're losing customers because of the possible buy out.
Jeff Ritter I think almost every company is struggling nowadays with our economy and tmobile is losing customers because of better deals in other places. They were going down before the merger was announced.
Wasim Mazahreh People aren't thinking clearly, AT&T will be getting all gsm phone. No more complaining that one carrier has the phone you want.
Julius Mawoussi Verizon is not that good Sprint is horrible. T-Mobile I don't really know never used there service. Loving AT&T not one issue.
Juan Jose Rios I'm contract just finished today with T-Mo. Not sure I want to stay with them if they become AT&T.
Luis Castro I'm with what Melissa said
Daniel Airozo t-mobile is losing customers because of the potential buyout. People hate at&t so they are jumping ship to verizon and sprint and other regional carriers and prepaid carriers
Raman Pourgevargiss No, i Hate at&t ,
Vince Gallo Verizon > Sprint >AT&T...? Yes.
Julius Mawoussi I think this is a good thing for us all. I like the fact AT&T is trying to fix some network issues.
James Oliver Makes perfect sense. Att is just better.
Jeff Daunis This is why they are losing customers
Melissa Cruz-Guzmán I was with T-mobile for almost 9 years and I left them because of AT&T. I was so mad because I didn't want to leave T-Mobile. They have the best customer service. But I'm good with Sprint so far.
Josh Rankin Customer loss is likely due to the AT&T merger announcement. Wonder how long AT&T will honor current T-Mobile customer plans before they force customers to one of their more expensive, less-featured plans?
Oscar Dominguez We will fight the evil on the streets on the Beaches we will never surrender! #sayno2att!!!!!!!!
Tommy La Rose Why wouldn't you want to be with att, its the better network?
Mike Jordan yes it does I think more people will come to ATT because they will have more coverage with them buying t-mobile so it may not be good for tmobile but its good for ATT in the long run and will help out the current ATT customers and future ones with better coverage nationwide.
Bethel Jacob Houston or is tmobile losing customers because of the buy out?
Justin Marden No... tmobile is probably losing customers because of the proposed deal. T-Mobile customers don't want to be with AT&T, bottom line.
Jeff Weis Most of their lost customers are most likely due to the impending takeover Do you really think people want to be a part of at&t ?
Brian Busyapongpakdee It makes sense for AT&T, just not for everyone else




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