U.S. mobile operator T-Mobile has posted its financial results for the fourth quarter of 2010—and the figures show that that company has some hard work ahead of it as it tries to compete with the likes of Verizon Wireless, AT&T, and Sprint. For the quarter, T-Mobile lost some 318,000 contract customers, compared to just 60,000 contract customers during the third quarter of 2010. T-Mobile attributes the losses both to stiff competition from other major wireless players as well as “revised credit standards” that set a higher bar for customers T-Mobile is willing to let sign up for a mobile contract—although the company did end the quarter with 33.73 million subscribers.
T-Mobile finished 2010 with revenue of $5.36 billion—down just one percent from 2009—but the fourth quarter was particularly hard on the company, with net income down to $268 million—a 12 percent decline compared to a year ago.
“Data growth in the U.S. mobile market continues to accelerate and with the largest 4G network T-Mobile USA is well-positioned to differentiate itself and grow consumer usage,” said Deutsche Telekom CEO René Obermann, in a statement. “We are not satisfied with contract churn, but we expect that the measures presented at the T-Mobile USA Investor Day in January will lead to improvements in 2011.”
T-Mobile’s “blended churn”—which includes both contract and pre-paid customers—was 3.6 percent during the fourth quarter, up from 3.4 percent in the third quarter and 3.3 percent in 2009. (Churn for contract subscribers was 2.5 percent.) T-Mobile has long exhibited fairly high subscriber churn compared to other players in the mobile industry, in part because T-Mobile has a relatively high proportion of pre-paid users who, not being on contracts, are more likely to defect to other carriers. The fourth quarter churn of 3.6 percent is the highest T-Mobile has seen in the last seven years. Last month, Obermann indicated that T-Mobile’s goal was to bring churn down to 1.8 percent during 2011.
T-Mobile nonetheless sees positive signs in its numbers, noting the company’s HSPA+ network is the largest in the U.S., covering some 200 million people, and it has some 8.2 million customers using 3G and 4G smartphones, with one million of those coming on board just in the fourth quarter of 2010.
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