T-Mobile USA Inc. posted a strong first quarter, beating analysts’ expectations in gaining just over 1 million new customers and lowering its customer churn rate while improving its revenues and income.
The carrier posted1.04 million net customer additions, which was nearly 9 percent more than T-Mobile USA reported for the first quarter of 2005. The operator noted that more of its new customers were postpaid retail customers-about 70 percent-compared to 66 percent postpaid in the last quarter of 2005. Overall, 84 percent of T-Mobile USA’s customer base was postpaid as of the end of the first quarter.
Prepaid customers did affect T-Mobile USA’s average revenue per user, though. The carrier’s ARPU slid $1 from the fourth quarter of 2005 and was down $3 from the first quarter of 2005 to land at $51. T-Mobile USA said that the dip was due to a “decrease in prepaid ARPU and increasing share of prepaid customers in the total customer base.”
Data services accounted for slightly more than 10 percent of T-Mobile USA’s ARPU, or $5.12, up from 7 percent in the first quarter of last year. T-Mobile USA cited strong growth in text and multimedia messaging for the boost, as well as 107,000 new customers using converged devices during the quarter, bringing the total number of converged devices, such as the Sidekick, in its customer base to 1.2 million.
T-Mobile USA’s total churn rate was down slightly from the first quarter of 2005, dropping from 2.8 percent to 2.7 percent. The carrier pushed its postpaid churn down from 2.3 percent in the same period last year to 2.1 percent, and prepaid churn fell from 6.4 percent in 2005’s first quarter to 5.8 percent in the first quarter of 2006.
T-Mobile USA’s total revenues clocked in at $4.04 billion, driven by services revenues of $3.4 billion, which had increased 17 percent from the first three months of 2005. The company’s first-quarter net income of $241 million was more than double the $103 million that it earned in last year’s first quarter.
“T-Mobile’s customer loyalty continues to increase, resulting in record low churn aided by the benefits of ever increasing network quality improvements-while continuing to reap the benefits of a 56-percent expansion in our coverage footprint last year,” said Robert Dotson, president and chief executive officer of T-Mobile USA.
The U.S. subsidiary of Deutsche Telekom AG once again proved to be the international operator’s growth driver; along with revenue growth in T-Mobile’s United Kingdom subsidiary and an asset sale, DT saw its net income grow by about 10 percent. However, the company is involved with some painful cuts to its work force abroad and continues to face tough competition in markets such as Germany. Several investment firms downgraded their ranking of the company’s stock last week.
