Holding out for AT&T, T-Mobile keeps customer losses in check

T-Mobile USA has been listed as a "discontinued operation" by its parent company Deutsche Telekom all year, and regulatory approval of the wireless provider's merger with AT&T is still pending, yet the number 4 wireless carrier in the US has managed to prevent mass customer flight.

On Thursday, T-Mobile USA posted its earnings report for the second quarter of 2011, revealing that it had $5.1 billion in net revenue, down from $5.2 billion in the first quarter. This figure represents all service contracts, equipment sales, and all other sources of income for the company, so T-Mobile continued to lose customers and sold fewer handsets in the quarter.

However bad this sounds, it's actually LESS BAD than the company had been doing. T-Mobile posted a net loss of 50,000 customers in the second quarter. It's significant, but much less than the losses it experienced in the same quarter last year, when it lost 93,000. In the first quarter of 2011 it lost a whopping 99,000 customers.

All things considered, that is a pretty big reduction in losses.

Furthermore, it sold fewer handsets altogether, but it sold more smartphones than it ever had before, which have higher pricetags and higher value data plans associated with them.

"In a challenging market, we are seeing some encouraging trends in the quarter, particularly with our prepaid product growth and our year-on-year contract ARPU increase, thanks to all-time high of 29% of our customer base using 3G/4G smartphones. While contract churn continues to be high, we are focused on upgrading our customers to higher quality products and concentrating on retaining our loyal customers," said Philipp Humm, President and CEO of T-Mobile USA.

A loss is a loss, but customers can be regained. Just ask Sprint, who was losing over a million subscribers a quarter in 2008 and 2009, but who has managed to add over a million subscribers for each of the last three quarters and now has the highest postpaid ARPU growth it has seen in the last seven years.

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