T-Mobile USA more than doubled its smartphone users in the fourth quarter, but heavy losses in its postpaid customer base indicate the company needs to do more to stop its contract customers from leaving to other carriers.
T-Mobile said the percentage of its customer base with 3G/HSPA+ devices doubled over the last year to 24 percent, with 8.2 million customers now using smartphones, but it lost 318,000 contract customers in the fourth quarter.
The losses in T-Mobile’s postpaid customer base were partially offset by a rise in connected devices and prepaid and MVNO customers, bringing the company’s net customer loss to 23,000. T-Mobile ended 2010 with 33.7 million customers.
Churn among T-Mobile’s contract customers stayed steady at 2.5 percent, but the combined churn for its prepaid and postpaid increased three-tenths of a percentage point to 3.6 percent amid higher turnover among T-Mobile’s prepaid customers. T-Mobile’s prepaid churn worsened to 7.5 percent in the fourth quarter, from 6.8 percent during the same period in 2009.
“High contract churn and significant contract customer losses in the fourth quarter of 2010 indicate that we still have a fair amount of work ahead of us and that any turnaround will take time,” said Philipp Humm, president and CEO of T-Mobile USA, in the company’s earnings results.
Humm said he was encouraged by the smartphone adoption and data growth of T-Mobile’s customers and said the company is taking steps to reduce churn in its postpaid base.
Postpaid ARPU rose one dollar to $52 on rising data use and handset insurance services, and prepaid ARPU also rose one dollar to $19 as customers on unlimited plans increased sales.
The company’s earnings slid 19 percent to $268 million as the cost of subsidizing high-end smartphones ate into profits. Revenue declined slightly to $5.36 billion after a decline in equipment sales offset a rise in data revenue and income from handset insurance.
T-Mobile has been working to compete against Sprint, AT&T and Verizon Wireless by upgrading its network to HSPA+ and deploying a line of smartphones which can take advantage of the network’s higher data speeds. T-Mobile’s HSPA+ network is currently available in 100 cities in the United States. The company plans to roll out dual-carrier HSPA+ this year, which will double the speeds offered by its current HSPA+ network.