While Waiting On The DOJ, T-Mobile USA Sees Year’s First Subscriber Growth

T-Mobile USA’s declining fortunes drove it to a merger with AT&T (NYSE: T), but while that deal continues to be investigated by regulators and strongly opposed by competitors, ironically, the operator seems to be showing some improvements.
In Q3 earnings today, T-Mobile USA’s parent Deutsche Telekom (NYSE: DT) noted that the U.S. subsidiary still lost customers and saw declines in revenues, but for the first time in a while, those losses were actually not that big. Revenues were down by 11.1 percent to €3.7 billion ($5 billion), but the company notes that this was partly down to the weaker dollar. Calculated in dollars, the decline over the same quarter last year was only 2.7 percent.
The company also noted that for the first time in a year, it saw a growth in its U.S. customer base. Contract customers were down by 186,000, but prepay customers (which tend to be lower value but cost less to have because they don’t take subsidized handsets) grew by 312,000. The company said that 40 percent of its customer base — 10.1 million users — are now on smartphones, and average data revenue across the whole of its customer base was up by 13 percent to $14.
In a conference call, DT’s CEO Rene Obermann remained confident that the deal to merge with AT&T in the U.S. will go through. The deal is currently being investigated by the DOJ and is being fiercely opposed by some competitors, most notably Sprint.
T-Mobile’s parent, Deutsche Telekom, reported a six percent decline in over revenues, to €14.7 billion ($20 billion), which was in line with analyst estimates as polled by Bloomberg. The company saw an increase in its profits on the back of cost cutting, reporting net profit growth of 14.6 percent to €1.1 billion ($1.5 billion).
Outside of the U.S. operation, Deutsche Telekom noted that mobile revenues were hampered in Europe (the focus of its international operations) by the enforced reduction in mobile termination rates on voice calls between different networks and between mobile lines and landlines.
That has put even more of a focus on mobile data and news services around that as an engine for growth, which has been seeing some significant progress especially in DT”s home market of Germany.
There, the carrier noted that smartphones now make up 64 percent of all devices sold (versus 53 percent for the same quarter last year). Outside of Germany, smartphones now accounting for 50 percent of all devices sold, compared to 30 percent a year ago.
Germany has also seen some big advances consumer broadband services. DT noted that the number of customers using its Entertain IPTV service grew its customer base by 32 percent, and the company continues to have a 45 percent share of the country’s broadband market.