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T-Mobile USA Reports First Quarter 2012 Operating Results
Posted: 10-May-2012 [Source: T-Mobile USA]

[T-Mobile reports lowest churn levels in seven years during the first quarter. T-Mobile USA served 33.4 million customers at the end of first quarter 2012, compared to 33.2 million customers at the end of the fourth quarter of 2011.]

T-Mobile USA, Inc. today reported first quarter 2012 results and provided an update on its 2011 annual assessment of indefinite-lived assets. In the first quarter of 2012, T-Mobile USA reported adjusted OIBDA of $1.27 billion, up 7.2% from $1.19 billion reported in the first quarter of 2011 and branded contract ARPU in the first quarter of 2012 of $58, up from $56 in the first quarter of 2011. Additionally, net customer additions were 187,000 in the first quarter of 2012, compared to 99,000 net customer losses in the first quarter of 2011.

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

"T-Mobile USA delivered an encouraging adjusted OIBDA year-on-year increase in the first quarter of 2012. Philipp Humm and his team managed the business with improved efficiency in a still difficult environment, laying the foundation for successful implementation of the Challenger Strategy," said René Obermann, CEO of Deutsche Telekom.

T-Mobile USA Challenger Highlights

T-Mobile USA has made considerable progress in executing against the reinvigorated Challenger Strategy, which was announced in February 2012. Most significant is progress against the newly announced $4 billion network modernization and 4G evolution effort, which will further improve existing voice and data coverage and pave the way for long term evolution (“LTE”) service in 2013. Already this year, T-Mobile USA has entered into a spectrum exchange agreement with Leap Wireless International, Inc. and secured key AWS spectrum licenses from AT&T, which were agreed to as part of the breakup of the proposed merger between the two companies. More recently, T-Mobile USA signed agreements with Ericsson and Nokia Siemens Networks to deploy state-of-the-art LTE-capable equipment at 37,000 cell sites in 2012 and 2013.

Other investment areas core to T-Mobile USA’s Challenger Strategy include continued retail expansion as well as an increased investment in the brand. So far this year, the Company has expanded its branded distribution, adding 115 new branded dealers and earned Wal-Mart’s 2011 “Supplier of the Year” award in both the Wireless category and the overall Entertainment Division.

The company also unveiled phase-one of a brand re-launch program, introducing a new ad campaign that encourages customers to Test Drive T-Mobile USA’s competitive 4G experience.

Additionally, the Company continued to expand its portfolio of compelling 4G smartphones in the first quarter. T-Mobile USA became the first U.S. carrier to offer a Nokia Windows® Phone, the affordable, 4G-capable Nokia Lumia 710, and launched the 42 Mbps-capable Samsung Galaxy S® Blaze™ 4G. In April 2012, T-Mobile USA launched the 42 Mbps-capable HTC One™ S. Total Customers

T-Mobile USA served 33.4 million customers at the end of first quarter 2012, compared to 33.2 million customers at the end of the fourth quarter of 2011 and 33.6 million customers at the end of first quarter 2011.

First quarter 2012 net customer additions of 187,000, compared to net customer losses of 526,000 in the fourth quarter of 2011, and net customer losses of 99,000 in the first quarter of 2011. The sequential increase in net customer additions was driven primarily by improvements in churn from branded contract and machine-to-machine (“M2M”) customers. Year-on-year, net customer additions also improved related to the growth of T-Mobile USA’s unlimited Monthly 4G prepaid plans.

Branded Customers

Branded contract net customer losses, excluding M2M, were 510,000 in the first quarter of 2012, a 28% improvement from the fourth quarter of 2011 and an 11% improvement from the first quarter of 2011.

Sequentially, the improvement in branded contract customer losses was driven primarily by fewer branded contract deactivations. The fourth quarter of 2011 included significantly higher contract deactivations as a result of the launch of the iPhone 4S by three nationwide competitors in mid-October.

The year-over-year improvement in branded contract customer losses was driven primarily by lower branded contract churn related to the strategic phase-out of discontinued products, such as FlexPay, partially offset by fewer branded contract gross additions.

The Company discontinued its FlexPay and Even More Plus products in 2011 due to low customer satisfaction and profitability. In the first quarter of 2012, remaining core branded contract and prepaid products saw year-on-year growth as customers continue to migrate from discontinued products.

Branded prepaid net customer additions, excluding MVNO customers, were 249,000 in the first quarter of 2012; up from fourth quarter 2011 branded prepaid net customer additions of 220,000 and improved from 82,000 net branded prepaid customer losses in the first quarter of 2011.

The sequential and year-on-year improvement in branded prepaid net customer additions was due to increased branded prepaid gross additions, a result of the continued success of unlimited Monthly 4G prepaid plans introduced in the second quarter of 2011. Additionally, improvements in churn related to the strategic phase-out of discontinued products, such as FlexPay No Contract, also contributed to prepaid net addition growth.

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