By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Bellevue, Wash. – T-Mobile USA’s revenues, operating income and net income fell in the second quarter as the carrier’s subscriber base shrank.
Total revenues fell 3.3 percent from the year-ago $4.88 billion and 3 percent from the first quarter. Operating income fell 11.2 percent to $452 million compared with the year-ago period. Net income fell year-over-year by 2.4 percent to $207 million.
Adjusted OIBDA (operating income before depreciation and amortization), excluding $67 million in employee severance costs, rose 4.8 percent from the year-ago period to $1.34 billion and up 5 percent from the first quarter.
Despite the income and subscriber losses, interim president/CEO Jim Alling said the carrier “continued to show considerable progress in a number of key areas, delivering solid adjusted OIBDA growth” and “encouraging branded contract and branded prepaid churn improvements.”
The company will “continue to invest in a number of key areas including the modernization of our network as we pave the way for LTE service in 2013, retail expansion, as well as an increased investment in promoting our brand,” he added.
For his part, René Obermann, CEO of parent Deutsche Telekom, said the second-quarter initiation of key initiatives such as network modernization “will improve [T-Mobile’s] competitiveness going forward.” He also said he is “encouraged by the strong cost discipline demonstrated by T-Mobile USA.”
The carrier’s other initiatives include a distribution expansion, with the carrier opening its 1,000th T-Mobile Premium Retailer (TPR) store in the quarter. These stores are operated by independent retailers who sell only T-Mobile products. In addition, the company struck a new distribution agreement with Dollar General, which previously sold only T-Mobile’s pay-as-you-go airtime cards. The new agreement puts a T-Mobile prepaid handset into the chain’s 6,400 stores as well as Monthly4G No Annual Contract plans services to complement pay-as-you-go service plans.
T-Mobile USA said it added about 8,700 prepaid doors in the second quarter.
To expand its reach in the B-to-B business market, T-Mobile began offering two new suites of mobile broadband data plans.
For the quarter, the customer base shrank by 205,000 compared with a first-quarter gain of 187,000, a year-ago loss of 50,000, and a full-year 2011 loss of 549,000. The decline reduced the subscriber base to 33.2 million from the first quarter’s 33.4 million and the year-ago 33.6 million.
Sharp declines in branded (non-wholesale) contract subscribers were offset partially by branded prepaid subscriber gains and gains in wholesale customers (via MVNO and M-to-M customers).
The number of branded contract subscribers fell by 557,000 following declines in the first quarter and each quarter in 2011. The company attributed the second-quarter decline to “fewer branded contract gross additions related in part to credit optimization initiatives and fewer new handsets launched in the second quarter of 2012.” In addition, industrywide gross additions were also down, T-Mobile noted.
The number of branded prepaid subs rose 227,000 for the fifth consecutive quarter of gains. Wholesale subscribers rose by 125,000.
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