T-Mobile loses 510k contract customers, gains 187k net customers because of pre-paid

May 10, 2012 | by Andrew Kameka



T-Mobile had a bit of good news, really bad news, and then some kind of good news in the first quarter of 2012. In its Q1 2012 earnings report, the nation’s fourth-ranked carrier revealed that it gained 187,000 net customers. That’s a big improvement on the 99,000 net losses during the same period last year.

Unfortunately, T-Mobile’s growth came largely in the pre-paid market, which is less valuable. The company lost 510,000 contract customers, an improvement over the 706,000 lost in Q1 2011, and the 574,000 lost in Q4 2011. Fewer losses is a good thing, but it’s still a loss, something T-Mobile is struggling to reverse.

The silver lining is that T-Mobile is still hurting but showed signs of taking baby steps towards improving performance.

“In the first quarter, T-Mobile USA delivered strong performance across several key metrics – adding customers, increasing branded ARPUs year-on-year and effectively managing costs to deliver a solid adjusted OIBDA margin. While branded contract churn remains a focus, in the first quarter of 2012 we achieved our lowest level in seven quarters…In just a short time since the December breakup of the AT&T deal, T-Mobile USA has redefined and restarted our Challenger Strategy including phase one of a major brand re-launch to redefine T-Mobile in the marketplace.”

- Philipp Humm, CEO and President of T-Mobile USA.

The Challenger Strategy is an advertising campaign touting T-Mobile’s network speeds and value. The ads are more aggressive and go after the AT&T iPhone, the device often blamed for T-Mobile’s problems. While Team Magenta has struggled for a while, it’s believed that being the only major carrier without the iPhone gives customers too much incentive to leave.

Could advertising, new devices, or a rumored merger with MetroPCS changes things for the better? Let’s hope.


Customer Results
Quarter to Date
March 31, December 31, March 31, Y-o-Y
(thousands) 2012 2011 2011 %?
Customers, end of period2
Branded Contract Customers 21,857 22,367 23,999 (9 %)
Branded Prepaid Customers 5,068 4,819 4,416 15 %
Total Branded Customers 26,925 27,186 28,415 (5 %)
M2M Customers 2,691 2,429 2,065 30 %
MVNO Customers 3,756 3,569 3,154 19 %
Total Wholesale Customers 6,448 5,999 5,220 24 %
Total T-Mobile USA Customers 33,373 33,185 33,635 (1 %)
Thereof, Contract Customers 24,548 24,797 26,065 (6 %)
Thereof, Prepaid Customers 8,824 8,389 7,570 17 %