Q4 tough on T-Mobile USA, No. 4 carrier posts dip in growth, ARPU

Fourth-quarter numbers from T-Mobile USA Inc. showed that the industry’s No. 3 and No. 4 players (Sprint Nextel Corp. and T-Mobile USA, respectively) were no match for their larger rivals during the all-important holiday shopping season.
T-Mobile USA previously announced a prepaid-heavy 621,000 net customer additions during the final three months of 2008, which was about 50,000 less than it added during the third quarter and 300,000 less than it added during 2007’s fourth quarter. Contract customers made up 43% of net additions during the fourth quarter of this year, notably down from the 77% during the fourth quarter of 2007. The carrier said that contract customers accounted for 82% of its 32.8 million customers at the end of 2008.
Sprint Nextel said it lost more than 1 million customers during the fourth quarter, while the industry’s No. 1 and No. 2 operators – Verizon Wireless and AT&T Mobility – posted 1.4 million and 2.1 million net adds, respectively.
T-Mobile USA blamed its shortfall on an increase in postpaid churn from 1.8% in 2007 to 2.4% in 2008. Blended churn also increased from 2.8% during the fourth quarter of 2007 to 3.3% last year.
Despite the slower growth, T-Mobile USA posted a notable increase in revenues from $5.1 billion during the fourth quarter of 2007 to $5.7 billion, while net income surged from $383 million to $483 million. Total average revenue per user dropped by $2 year-over-year and sequentially to $50 – however, data ARPU increased more than 17% sequentially to $9.30 during the fourth quarter of 2008.
Though T-Mobile USA’s data ARPU fell short of its larger rivals AT&T Mobility Inc., Verizon Wireless and Sprint Nextel, which all reached $13 or higher during the fourth quarter, the carrier is intent on getting its customers up to speed. T-Mobile USA said it extended its 3G network to cover 107 million people in 130 cities at the end of 2008. T-Mobile USA also continued investments in its GSM/GRPS/EDGE network, saying it added 1,100 new cells sites to the network during 2008’s fourth quarter.
The carrier is also reportedly looking to shore up its position in the increasingly competitive low-cost space by trialing an unlimited calling plan at $50 per month. The price point has gained increased attention following Sprint Nextel’s Boost Mobile introduction of a no-contract, unlimited plan for $50 per month, and the successful quarter reported by unlimited calling providers Leap Wireless International Inc. and MetroPCS Communications Inc.