Saturday, November 12, 2011

T-Mobile Reports An Increase in U.S. Customers

It was announced on Thursday, November 10 that T-Mobile has been able to increase its number of U.S. customers during the last quarter. This is the first time that the company has been able to do so in over a year.

"A decline of 186,000 contract customers in the third quarter was offset by an increase in prepay customers of 312,000," Deutsche Telekom, T-Mobile's parent company, stated during an earnings report.

Deutsche Telekom seemed to be very surprised by the progress that T-Mobile had made. They said that T-Mobile had "reported somewhat more positive development than in past quarters."

Deutsche Telekom went on to say that, on average, T-Mobile brings in about $14 per customer in revenue. This is a 13 percent jump from this time last year. Although T-Mobile is the only carrier out of the four major U.S. carriers to not offer the iPhone, it reported that the number of its customers with smartphones has increased by 40 percent, reaching 10.1 million customers.

"The improvement in earnings was largely attributable to successful savings initiatives and new rate plans without subsidized handsets," Deutsche Telekom said.
So, the big question is whether or not these improvements will affect AT&T’s efforts to purchase T-Mobile. One of AT&T’s main points during a recent Department of Justice lawsuit was that T-Mobile is going downhill and can only be saved if a company like AT&T saves it.

In September, in response to the DOJ, AT&T said that different rivals like Sprint are unable to "explain how T-Mobile, the only major carrier to have actually lost subscribers in a robustly growing market, provides a unique competitive constraint on AT&T."

"For the past two years, T-Mobile has been losing customers despite growing demand, and, without the spectrum to deploy a 4G LTE network such as that deployed by the other carriers, there is no reason to expect a change in its undifferentiated competitive significance," AT&T continued.

There is also a major debate about if the AT&T and T-Mobile merger were to occur whether or not it would create or kill jobs. The Communication Workers of America put out a report on Tuesday that said that the merger would create thousands of job, and the Economic Policy Institute said that a merger between the two mobile carriers could create somewhere between 55,000 and 96,000 jobs over the next seven years. They did, however, mention that this would only occur if AT&T followed through on its promise to invest $8 billion into its infrastructure over the seven year period.

However, the director of the Center for Economics and Public Policy at the University of California at Irvine, David Neumark, said in a report released in August that "AT&T has actually told investors and the federal government that the merger would lead to reduced capital expenditures on net. If you take EPI's own logic and apply that net reduction in capital expenditures to the data, you predict fewer jobs, not more jobs."

Who knows what will happen? AT&T is clearly the stronger company, but it is also apparent that T-Mobile is taking steps towards being a much more successful mobile carrier. Who knows if T-Mobile has enough time to save themselves though? One successful quarter does not mean that they are necessarily heading in the right direction overall. We’ll just all have to wait and see how it goes.

Source: PCMag - T-Mobile Adds Customers as Battle Over AT&T Merger Continues

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