T-Mobile USA Inc. reported a surprisingly strong 957,000 net customer additions for the first quarter of this year, which fell short of the nearly 1.2 million customers the carrier added during the first quarter of 2004, but was well ahead of analysts’ forecasts of around 800,000 net additions. T-Mobile USA ended the quarter with more than 18.2 million total subscribers.
T-Mobile USA noted that about 19 percent of its net customer additions during the quarter were prepaid customers, and that 12 percent of its total customer base were prepaid subscribers at the end of the quarter. T-Mobile USA had previously said it expected prepaid customers to make up a growing percentage of its customer growth and recently launched a new branding effort for its prepaid offering.
T-Mobile USA also reported that it added 91,000 customers during the quarter to its Research In Motion Ltd. BlackBerry-based service, bringing its total BlackBerry customer base to 502,000 subscribers.
A drop in customer churn from 3 percent during the first quarter of 2004 to 2.8 percent this year bolstered the relatively strong growth. T-Mobile USA’s management attributed the churn reduction to its retention efforts and commitment to higher-quality service. T-Mobile USA has won a number of customer service and network quality awards from J.D. Power and Associates during the past several months.
Average revenue per user remained steady year-over-year at $54 despite a slight decline in prepaid ARPU from $29 during the first quarter of 2004 to $28 this year. T-Mobile USA noted that data services accounted for 7.6 percent of postpaid ARPU during the quarter compared with 4.5 percent last year.
Cash cost per user also increased from $23 during the first quarter of 2004 to $26 this year, which the carrier attributed to changes in accounting practices and an increase in handset subsidies, while the cost per gross addition jumped from $326 during the first quarter of 2004 to $357 this year.
Total revenues surged more than 32 percent from $2.6 billion during the first quarter of 2004 to $3.4 billion this year. The growth was led by a 29-percent increase in postpaid revenues and a 30-percent increase in prepaid revenues, which offset a slight decline in equipment sales. T-Mobile USA also reported $120 million in wholesale revenues, which included Cingular Wireless L.L.C. customers using T-Mobile USA’s recently acquired networks in California and Nevada that have not yet been transitioned to AT&T Wireless Services Inc.’s network that Cingular gained when it bought AWS last October.
The strong revenue gains also propelled T-Mobile USA’s net income from a loss of $157 million during the first quarter of 2004 to a return of $103 million this year.
