Bellevue, Wash. - T-Mobile USA's subscriber base, revenues and net income continued to shrink in the first quarter as the carrier's high 2.4 percent churn rate among postpaid subscribers failed to offset prepaid subscriber growth.
Total revenues fell 2.2 percent year-over-year to $5.16 billion. Net income fell 72.7 percent to $135 million compared with the year-ago quarter, and fell sequentially from the fourth quarter's $268 million.
The performance follows full-year 2010 declines in the subscriber base, revenues, and net income.
Sequentially and year-over-year, first-quarter net income fell primarily because of higher equipment subsidies to retain subscribers and because more customers upgraded to smartphones, which are more heavily subsidized than other phones, the carrier explained.
T-Mobile parent Deutsche Telekom also posted a depressed quarter. The parent's revenues fell 3 percent to 14.6 billion euros, and adjusted net profit declined 27.4 percent to 0.7 billion euros.
Referring to its U.S. subsidiary, which AT&T plans to purchase pending government approval, Deutsche Telekom said the churn rate among contract customers "remained a weak point in the first quarter," resulting in a drop of 471,000 contract customers. That drop was partially offset by growth of 372,000 in prepaid customers. The carrier's overall customer base, however, declined by 99,000 compared with the end of 2010 to 33.6 million.
In 2010, T-Mobile lost 56,000 subscribers, having lost subscribers during every quarter in 2010 but the third. In 2009, it gained 1.03 million subscribers.
Also in 2010, the carrier's total revenues and net income fell on a year-over-year basis.
Although the planned sale of T-Mobile "heralded the beginning of a new era for us," said Deutsche Telekom chairman René Obermann, the company will press ahead with T-Mobile USA's restructuring. T-Mobile USA, a prepared statement said, "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 parent company said.
On the bright side in the U.S., "the focus on attractive rate plans and smartphones, as well as outstanding network quality, is starting to pay off," Deutsche Telekom said. Data revenue per user in the first quarter rose by more than 20 percent year-on-year to $1.33 billion. The number of subscribers using 3G and 4G smartphones in the quarter grew to 9.1 million, up sequentially by 11 percent from the fourth quarter's near 1 million.
T-Mobile noted that it offers 4G HSPA+ speeds in 170+ markets reaching more than 200 million people, making it the country's largest 4G network. The company has been upgrading its 4G network to double theoretical download speeds to 42Mbps, which is currently available in around a half-dozen markets but will be expanded to 25 markets with a population of 140 million by mid year, the carrier said.