T-Mobile earnings fall as customers depart
The mobile carrier suffers a loss of customers in the fourth quarter compared with gains a year ago and in the third quarter. T-Mobile USA head Philipp Humm says "any turnaround will take time."
A first-ever loss in customers for T-Mobile USA took its toll on sales and earnings during the fourth quarter.
For the quarter ended December 31, the mobile carrier suffered a total loss of 23,000 subscribers, compared with gains of 137,000 in the third quarter and 371,000 in 2009's final quarter. The churn rate measuring the overall customer exits rose to 3.6 percent in the quarter, up from 3.3 percent a year ago.
The exodus of subscribers pushed down fourth-quarter earnings to $268 million, down from $306 million in the prior year's quarter. Sales inched down to $5.36 billion, a drop of around 1 percent from $5.41 billion a year ago. For 2010 as a whole, T-Mobile saw its earnings dip to $1.3 billion from $1.4 billion and sales fall to $21.3 billion from $21.5 billion.
The number of prepaid subscribers actually rose by 295,000, though that showed a sharp drop from the 488,000 prepaid customers added in the fourth quarter of 2009. And the prepaid gains were more than wiped out by the loss of 318,000 contract customers.
Reflecting on the latest results, the company admitted it has its work cut out for it to bring the churn rate back down.
"High contract churn and significant contract customer losses in the fourth quarter of 2010 indicate that we still have a fair amount of work ahead of us and that any turnaround will take time," T-Mobile USA president and CEO Philipp Humm said in a statement." With the ongoing implementation of our challenger strategy, we are laying the foundation for improved performance going forward."
In an interview with CNET last month, Humm discussed some new strategies that he hopes can help the company win back more customers, including expanding its coverage and boosting network performance.
T-Mobile's weak results didn't help its parent Deutsche Telekom, which saw its own overall quarterly profits drop due largely to the struggling economy in certain parts of Europe and the effects of higher government taxes on mobile carriers.