T-Mobile

T-Mobile has finally posted its Q3 2012 earnings and they're looking pretty good. We'll start first with the carrier's postpaid contract earnings. On the postpaid side, T-Mobile posted total revenues of $4.9 billion, down 6.4-percent year-over-year. Contract ARPU (Average Revenue Per User) dropped slightly by 3.3-perecent to $56.59, mostly due to the move to Value Plans which make up a quarter of postpaid subscribers. T-Mobile in the end lost 492,000 postpaid customers for the quarter, which is an improvement from last quarter.

The positive side of this quarter's earnings is in prepaid. T-Mobile added 365,000 prepaid subscribers on the quarter, and prepaid revenues were up 38-percent (year-over-year) to $450 million. ARPU was also up 12.5-percent to $27.35 for prepaid customers. Wholesale customers (that's M2M and MVNO) also increased by 287,000. These are pretty big growth numbers, and you can understand why T-Mobile has started to push towards prepaid more and more.

Overall, T-mobile's net income for the quarter was a loss to the tune of $7.8 billion. That sounds bad, but let us quickly explain why they made a loss this quarter. Because of the merger between T-Mobile and MetroPCS, the carrier had to take a non-cash "impairment charge" of $8.1 billion, and chose to write it all down in one quarter. This turned a quarter that would have been a $400 million profit into one with a considerable loss. Mergers aside, expenses for the quarter were down 0.4-percent year-over-year.

When looking at the root causes behind the numbers you can hardly call this a "loss" for the quarter, all things considered. Money was well spent on a merger that will improve T-Mobile's position in the U.S. market considerably, and prepaid growth is looking positive for the future.

Source: T-Mobile Newsroom; Extended Financial Summary (PDF)

 

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T-Mobile posts Q3 2012 earnings, prepaid doing well

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T-Mobile is in much better shape. Sprint loses around $1 billion a quarter with no merger related expense.

Sprint has a very large network enhancement and LTE rollout going on which the reason for their large losses. They increased subscribers last quarter.

T-mobile may be profitable right now but they are losing the more profitable postpaid customers at a faster rate than they are gaining prepaid customers which are less profitable. T-mobile isn't doing that great.

Sprint may be gaining customers, but given that a vast majority of new customers on Sprint are coming for the iPhone, those customers are likely being acquired at a loss to the company.

T-Mobile is also in the middle of a big network reinvestment project just like Sprint is. Moving from 1700/2100MHz to 1900MHz for HSPA+ and preparing to launch LTE at the end of 2013 costs money too.

I don't see anything necessarily "bad" about losing postpaid subscribers in favor of prepaid subscribers. In the short term its going to hurt monetarily, but just because revenues for prepaid are lower doesn't mean its unprofitable. Costs are substantially lower for prepaid and wholesale customers. T-Mobile understands that if they can't compete in the postpaid arena they need to try something else.

T-Mobile is in much better shape. Sprint loses around $1 billion a quarter with no merger related expense.

I'm one of those prepaid subscribers! Now I just need my Nexus 4 to experience the full glory of no-contracts unlocked goodness :)