T-Mobile Posts Dreary Q4

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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.


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