T-Mobile USA struggles to keep up with competitors
T-Mobile USA, owned by Deutsche Telekom, is struggling to add new customers as it tries to keep up with bigger rivals, such as AT&T and Verizon Wireless.
T-Mobile USA is adding new subscribers, but the No. 4 wireless operator can't seem to catch much ground on its larger competitors.
Deutsche Telekom, T-Mobile USA's parent company, reported second quarter earnings on Thursday and gave some detail on its U.S. operations. While T-Mobile USA increased revenue for the quarter by about 14.3 percent compared to a year ago, the company is not adding as many new customers as it has in the past. Total revenues rose to $5.47 billion from $4.78 billion in the prior-year quarter.
In the second quarter, T-Mobile USA reported it had added 525,000 new subscribers. This isn't bad considering Sprint Nextel lost about 901,000 subscribers in the quarter. But T-Mobile's net additions were about 22.1 percent less than what it added in the same quarter a year ago. In 2007, the company added 857,000 new subscribers.
Management blamed the decline in net additions on the fact that some customers were not renewing their two-year fixed contracts, which started back in April 2006.
In total, T-Mobile has 31.5 million customers, putting it in a distant fourth place. Meanwhile, bigger players, such as AT&T added 1.3 million subscribers in the quarter for a total of 72.9 million subscribers. Verizon Wireless added 1.5 million new subscribers in the second quarter for a total of 68.7 million subscribers. And Sprint Nextel, which lost 901,000 subscribers, still has about 51.9 subscribers.
T-Mobile is in a tough spot when it comes to competing with these big carriers, largely because its footprint is not as big and because it's just now getting into the 3G game. It only started rolling out its 3G network this summer. And on Wednesday it just announced it had activated 3G in its second city, Las Vegas. The service launched in New York City.
So far it doesn't look like the company has been able to pick off many of the frustrated Sprint customers. But if Sprint continues to have problems, T-Mobile might be able to win some of those customers to its service if it can increase coverage and do well with its value services, such as HotSpot@Home and the MyFaves calling circle.