March 3, 2006

T-Mobile USA posted the best overall performance last year among parent company T-Mobile International’s subsidiaries, helping to drive solid gains in parent company Deutsche Telekom AG’s full-year profit for 2005.

DT also posted its largest dividend.

However, DT’s fourth quarter profits plunged 43 percent compared with the same quarter in 2004.

Some of DT’s European wireless subsidiaries struggled, but T-Mobile USA led the pack with $14.1 billion in net revenue for 2005, up 28 percent from the prior year; customer growth of more than 25 percent year-over-year, ending 2005 with 21.7 million subscribers.

And adjusted earnings before interest, taxes, depreciation and amortization of $2.4 billion, up 60 percent from 2004.

While fourth quarter average revenue per user for T-Mobile USA was up $1 from the fourth quarter of 2004 to $52, blended ARPU for the year slid from $55 in 2004 to $53 in 2005.

"Our U.S business is currently the key growth engine driving mobile communications,” said Kai-Uwe Ricke, chairman of DT.

“T-Mobile USA is a continuing success story of which we can rightly be proud. This is precisely why we are also preparing to participate in the auction for additional spectrum in the USA.”

Ricke went on to say that T-Mobile USA would use the spectrum to build a next generation mobile network, although he declined to estimate how much DT was willing to put into the spectrum auction and subsequent build-out.

The company had previously said it expected to spend around $2 billion for additional spectrum in the United States.

For all of DT’s international wireless subsidiaries, revenues were $35.1 billion, an increase of 11 percent year-over-year.

The operator had 86.6 million customers at the end of 2005. Revenue from data services, not including text messaging, grew 43 percent for the T-Mobile group to just over $1 billion.

However, the carrier is stumbling in the German and United Kingdom markets, where net revenues and adjusted EBTIDA for the year were down and ARPU also dropped $1 in year-over-year comparisons.

“Competition in our markets has become tougher—and I mean much tougher,” said Ricke.

T-Mobile USA released its customer numbers in January.

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The fourth-largest U.S. operator had its best-ever customer additions of 1.4 million during the fourth quarter. About a third of those, or 34.5 percent, were prepaid customers.

The carrier managed to reduce its fourth-quarter combined churn to 2.9 percent from 3.1 percent in 2004.

Postpaid churn was 2.3 percent for the quarter, improved from 2.6 percent at the same time last year, while prepaid churn held steady at 6.6 percent.

T-Mobile USA wrapped up 2005 with a customer base that is 85 percent postpaid.

Source: RCR

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