August 12, 2005

T-Mobile USA reported 972,000 new customer additions for the second quarter, which fell short of the nearly 1.1 million customers the carrier added during the second quarter of last year, but still ahead of analyst estimates of between 700,000 and 900,000 net subscriber additions.

Total revenues surged 28.7 percent year-over-year from $2.8 billion during the second quarter of 2004 to $3.6 billion this year. Net income jumped more than 61 percent from $240 million last year to $387 million this year.

Reflecting a growing dependence on prepaid customers, T-Mobile USA noted that about 30 percent of net additions during the second quarter were non-contract customers compared with 19 percent during the first quarter and 14 percent during the second quarter of 2004.

The carrier added that prepaid subscribers accounted for 13 percent of its 19.2 million subscribers at the end of the second quarter compared with 11 percent at the end of the second quarter last year.

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Despite the increasing reliance on prepaid customers, T-Mobile USA reported that customer churn remained stable year-over-year at 2.8 percent.

The carrier also noted that its cost per gross addition dropped from $318 during the second quarter of 2004 to $310 this year due to lower sales-and-marketing expenditures, as well as a change in its sales mix.

Average revenue per user dropped slightly from $55 during the second quarter of 2004 to $54 this year. T-Mobile USA noted that data services increased from 5 percent of postpaid ARPU during the second quarter of 2004 to 8.2 percent this year.

T-Mobile USA's cash cost per user jumped more than 11 percent from $23.09 during the second quarter of 2004 to $25.66 this year.

The carrier attributed the increase to costs associated with operating networks in California, Nevada and New York, which it acquired from Cingular Wireless L.L.C. earlier this year, and providing transitional network services to Cingular's customers.

Source: RCR News