T-Mobile USA managed to squeak out a net gain in customer additions for the final three months of 2012, thanks to a strong turnaround in its wholesale operations and a dip in branded defections.
During the fourth quarter, T-Mobile USA said it lost 349,000 branded customers, which was a significant improvement from the 486,000 customers it lost during the same quarter in 2011. The latest losses were all from its postpaid operations that lost 515,000 subscribers during the fourth quarter, more than offsetting the 166,000 no-contract customers the carrier added.
However, robust growth from its wholesale operations, which include machine-to-machine and mobile virtual network operator partners, allowed the carrier to post 61,000 net connection additions to its network for the full quarter compared with a loss of 526,000 total connections the previous year. The wholesale operations added 410,000 connections during the fourth quarter compared with a loss of 40,000 connections during the same quarter of 2011.
T-Mobile USA ended 2012 with nearly 33.4 million connections on its network, a slight uptick from the nearly 33.2 million it began the year with.
Helping to stymie its branded customer defections was a slight dip in customer churn from 3.6% during the fourth quarter of 2011 to 3.5% in 2012. That decreased was driven by improvements in contract churn, which dropped from 3% to 2.5% year-over-year, though the carrier did note the launch of the latest iPhone late last year drove a sequential increase in contract customer losses.
Average revenue per user took a hit during the quarter, dropping more than 9% year-over-year to $41.31. The carrier attributed the drop to a customer shift to new rate plans and prepaid offerings as well as an increase in its lower-ARPU wholesale operations. T-Mobile USA explained that branded prepaid, wholesale and postpaid “value” plan customers increased from 40% of its customer base at the end of 2011 to 57% in 2012.
T-Mobile USA did note that its network supported 1.8 million iPhone devices at the end of 2012, with about half signed up to one of the carrier’s contract offerings. T-Mobile USA has said it would begin officially offering Apple products later this year, though it has been aggressively targeting current AT&T Mobility iPhone customers.
That dip in ARPU, along with relatively flat customer growth, dragged down revenues 5% year-over-year to $4.9 billion for the fourth quarter. Adjusted operating income before depreciation and amortization margins also dropped from 31% in 2011 to 25% during the final three months of 2012.
Operating expenses plunged during the fourth quarter from $11.1 billion in 2011 to $4.7 billion in 2012, though the 2011 results were skewed by $6.4 billion impairment charge. Including some tax charges, T-Mobile USA’s net loss for the fourth quarter came in at $8 million.
The carrier also noted that during the quarter it transferred virtually all of the proceeds generated from its sale of tower assets to Crown Castle as an equity distribution to parent company Deutsche Telekom.
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