Nov. 10, 2006

T-Mobile USA turned in a strong third quarter, gaining more than 800,000 net subscribers, the majority being of the higher-valued postpaid variety.

T-Mobile USA said it added 802,000 total customers during the quarter, including 773,000 postpaid customers.

The number was down from the 1 million customers the carrier added during the third quarter of 2005, but up sequentially from the 613,000 subscribers the carrier added during the second quarter of this year.

The fourth-largest U.S. carrier now has a customer base of 24.1 million, of which 85 percent are postpaid subscribers.

“T-Mobile USA continues to be Deutsche Telekom’s key growth driver,” said Rene Obermann, chief executive officer of T-Mobile USA’s parent company T-Mobile International.

Postpaid average revenue per user increased by $1 to $56, compared with $55 postpaid ARPU in both the second quarter of 2006 and the third quarter of 2005.

However, overall ARPU ticked downward from $53 in the third quarter of 2005 to $52 in 2006’s third quarter.

The carrier indicated that the increase in postpaid ARPU was “primarily related to data revenue growth,” while the decrease in total ARPU was due to the higher mix of lower-paying prepaid customers in its 2006 customer base.

Overall customer churn rose slightly compared with the second quarter of 2006 and the same quarter a year ago—following the seasonal trend that other carriers have reported.

Prepaid churn increased from 6.6 percent last year to 6.9 percent this year, while postpaid churn was down slightly from 2.4 percent in 2005’s third quarter to 2.3 percent this year.

T-Mobile USA’s service revenues were up about 18 percent from the same quarter in 2005, to $3.7 billion. The carrier’s profits were up as well, increasing from $458 million a year ago to $1.79 billion this year.

The increase was due mostly to a $1.5 billion non-cash income tax benefit.

Technology Business Research Inc. analyst John Byrne called T-Mobile USA’s results “a strong comeback,” and added that the impressive 80 percent postpaid mix of the quarter’s new customers “should help keep churn under control going forward.”

T-Mobile USA recently introduced a new advertising campaign and a new service called MyFaves, which allows users to choose up to five wireless or wireline numbers, regardless of network, for unlimited calling.

Source: RCR News