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T-Mobile Posts Dreary Q4

2/25/2011 09:46:32 AM Eastern

Bellevue, Wash. - T-Mobile didn't
have much good to say about its fourth-quarter and full-year 2010 performance
other than to say it still made money, although it made less of it compared
with the year-ago periods.

The carrier's subscriber base
shrank sequentially, churn rates rose to their highest levels of the year,
total revenues fell on a year-over-year basis, and operating and net income
fell on a year-over-year basis. The performance prompted Philipp Humm, T-Mobile
USA's new president/CEO, to say the company has "a fair amount of work ahead of
us and that any turnaround will take time."

During 2010's fourth quarter,
T-Mobile suffered "significant contract customer losses," primarily because of
fewer gross contract-customer additions that in turn were "driven primarily by
revised credit standards and competitive intensity," Humm said in the company's
financial
report
.

 Rene Oberman, CEO of T-Mobile parent Deutsche
Telekom, said he was disappointed in the sequential rise in the churn rate of
contract customers in the quarter to 2.5 percent from 2.4 percent to its
highest quarterly level of the year. He said he expects that "measures
presented at the T-Mobile USA Investor Day in January will lead to improvements
in 2011."

 For its part, RadioShack has blamed T-Mobile's
fourth-quarter performance for its own 25 percent drop in its fourth-quarter
profit. RadioShack has also said T-Mobile breached its contractual agreement
with the retailer but didn't describe the breach, which RadioShack said had a
material impact in its retail business.

 For the quarter, the carrier lost 23,000
subscribers, and for the year, it lost 56,000 subscribers, putting its year-end
subscriber base at 33.73 million. The carrier lost subscribers during every
quarter in 2010 but the third quarter. In 2009, it gained 1.03 million
subscribers.

Total revenues shrank by 1
percent for the quarter and full year to $5.36 billion and $21.4 billion,
respectively.

Operating income shrank in the
quarter by 5.5 percent to $613 million compared to the year-ago quarter, and
full-year operating income fell 11.5 percent to $2.71 billion. Net income fell
in the quarter by 12.4 percent to $268 million, compared with the year-ago
quarter, and by 7.9 percent for the full year to $1.35 billion.

 On a positive note, the company said data ARPU
(average revenue per user) rose 25.5 percent in the quarter to $12.80, compared
with the year-ago quarter, and that the number of smartphone users rose
sequentially by 1 million to 8.2 million in the fourth quarter. The number of
smartphone users was up on a year-over-year basis by more than 110 percent,
from 3.9 million at the end of 2009.

 Smartphone users accounted for 24 percent of
all subscribers in the quarter, up from 21 percent in the third quarter and 12
percent in the fourth quarter of 2009.

Total ARPU (voice and data
combined) was flat on a year-over-year basis, at $46.