T-Mobile USA Announces 4Q 2009 Results

Posted on 25. Feb, 2010 by in Tech News

Today T-Mobile USA announced their 4th quarter 2009 results.  Overall it looks like things are going up for T-Mobile.  The additions of their Even More and Even More Plus plans helped as well as the never ending expansion of their 3G network.  The key elements of their results listed below.

  • 3.9 million 3G-capable converged device users as of the end of 2009, up almost 40% from the end of the third quarter of 2009 and a nearly five-fold increase during the year.
  • 371,000 net new customers added in the fourth quarter of 2009, up from a decline of 77,000 in the third quarter of 2009, but down from 621,000 in the fourth quarter of 2008.
  • $1.38 billion Operating Income Before Depreciation and Amortization (“OIBDA”) in the fourth quarter of 2009, down from $1.57 billion in the fourth quarter of 2008; OIBDA margin of 30% in the fourth quarter of 2009, compared to 32% in the fourth quarter of 2008.
  • T-Mobile’s national 3G network reaches over 205 million people at the end of the fourth quarter of 2009, nearly doubling the 3G footprint during the year.

Good form T-Mobile, good form.

Read on for the full press release

BELLEVUE, Wash., February 25, 2010 — T-Mobile USA, Inc. (“T-Mobile USA”) today reported fourth quarter of 2009 results.  In the fourth quarter of 2009, T-Mobile USA reported 371,000 net customer additions compared to net customer losses of 77,000 in the third quarter of 2009.  In addition, 3G-capable converged device users and 3G network coverage increased significantly during the year. OIBDA of $1.38 billion in the fourth quarter of 2009 was lower compared to the prior quarter and the fourth quarter of 2008, a decline due primarily to higher customer acquisition and advertising costs.

“T-Mobile USA delivered on two significant objectives in 2009.  The first was to achieve national scale with a high-quality 3G network offering.  This was realized in the fourth quarter of 2009 with more than 200 million people now covered across the country.  The second was to launch our first HSPA+ market.  The successful launch of T-Mobile HSPA+ in Philadelphia now serves as the model for a national roll-out of one of the fastest and most pervasive networks in the United States,” said Robert Dotson, President and CEO, T-Mobile USA.  “This renewed competitive network strength coupled with the strong value of our new Even More value rate plans, which offer unsubsidized handset options and no contracts, puts T-Mobile in a new competitive position to drive increasing data usage and entice quality customers to T-Mobile.”

René Obermann, Chief Executive Officer, Deutsche Telekom, said, “T-Mobile USA made significant progress in 2009 in expanding its 3G network, improving its 3G-capable device lineup, enhancing its distribution, and underscoring its value proposition.   This creates a solid foundation to benefit from the robust mobile Internet market.”

Customers

  • T-Mobile USA served 33.8 million customers at the end of the fourth quarter of 2009, up   from 33.4 million at the end of the third quarter of 2009 and 32.8 million at the end of the fourth quarter of 2008.
    • In the fourth quarter of 2009, total customers increased by 371,000, compared to net customer losses of 77,000 in the third quarter of 2009 and 621,000 net new customers in the fourth quarter of 2008.
    • Compared to the third quarter of 2009, the number of net new customer additions increased due primarily to T-Mobile branded customer additions (contract and prepaid wireless customers excluding wholesale and machine-to-machine customers).  Branded customer additions benefited from strong holiday sales and the launch of the new Even More and Even More Plus rate plans during the quarter.  The Even More and Even More Plus rate plans offer industry-leading value with features including unlimited nationwide voice, text and data services, and include rate plans with and without contracts and subsidized handsets.
    • Net contract customer losses were 117,000 in the fourth quarter of 2009, compared to 140,000 net contract customer losses in the third quarter of 2009 and net contract customer additions of 267,000 in the fourth quarter of 2008.  The underlying mix of contract customer additions improved compared to the third quarter of 2009, with a smaller proportion of lower-ARPU contract additions during the fourth quarter of 2009.
    • The decrease in total and contract customer additions compared to the fourth quarter of 2008 was due primarily to fewer FlexPaysm customer additions.
  • Prepaid net customer additions, including wholesale customers, were 488,000 in the fourth quarter of 2009, up from 63,000 in the third quarter of 2009 and 355,000 in the fourth quarter of 2008.
    • Higher wholesale net customer additions were the primary reason for the sequential and year-on-year increase in prepaid additions.  Wholesale customers totaled 2.0 million at December 31, 2009.
  • Contract customers comprised 79% of T-Mobile USA’s total customer base at December 31, 2009, compared to 80% in the third quarter of 2009 and 82% in the fourth quarter of 2008.

Churn

  • Blended churn, including both contract and prepaid customers, was 3.3% in the fourth quarter of 2009, down slightly from 3.4% in the third quarter of 2009 driven by improved prepaid churn, and in line with the fourth quarter of 2008.
  • Contract churn increased in the fourth quarter of 2009 to 2.5% from 2.4% in the third quarter of 2009 and fourth quarter of 2008.
  • Prepaid churn, including FlexPay no-contract, was 6.8% in the fourth quarter of 2009, a decrease from 7.4% in the third quarter of 2009 due in part from the success of the new Even More Plus rate plans and seasonality.

OIBDA and Net Income

  • T-Mobile USA reported OIBDA of $1.38 billion in the fourth quarter of 2009, compared to $1.56 billion in the third quarter of 2009 and $1.57 billion in the fourth quarter of 2008.
  • The sequential decrease in OIBDA was due primarily to seasonally higher acquisition costs related to branded customer additions, a higher proportion of additions through more expensive retail channels, and higher advertising costs in connection with the launch of the new Even More rate plans and the holiday sales season.
  • Year-over-year OIBDA decreased due primarily to lower contract customer revenues as described below.
  • OIBDA margin (as defined in Note 6 to the Selected Data, below) was 30% in the fourth quarter of 2009, down from 33% in the third quarter of 2009 and 32% in the fourth quarter of 2008.
  • Net income in the fourth quarter of 2009 was $306 million, compared to $417 million in the third quarter of 2009 and $483 million in the fourth quarter of 2008.

Revenue

  • Service revenues (as defined in Note 1 to the Selected Data, below) were $4.65 billion in the fourth quarter of 2009, down from $4.73 billion in the third quarter of 2009 and $4.90 billion in the fourth quarter of 2008.
    • The sequential and year-over-year decrease in service revenues in the fourth quarter of 2009 was primarily due to a change in the customer mix, including an increase in wholesale customers.
  • Total revenues, including service, equipment, and other revenues were $5.41 billion in the fourth quarter of 2009, up from $5.38 billion in the third quarter of 2009 but down from $5.72 billion in the fourth quarter of 2008.
    • Sequentially, the increase was driven by higher equipment sales related to increased volume of more expensive data devices, offset partially by lower service revenues. Compared to the fourth quarter of 2008, the decrease was driven by lower service revenues as described above.  Also, total revenues in the fourth quarter of 2008 benefited from revenue related to the migration of AT&T’s customers to its own network following the dissolution of a network sharing venture.

ARPU

  • Blended Average Revenue Per User (“ARPU” as defined in Note 1 to the Selected Data, below) was $46 in the fourth quarter of 2009, down from $47 in the third quarter of 2009 and $50 in the fourth quarter of 2008.
  • Contract ARPU was $51 in the fourth quarter of 2009, down from the $52 in the third quarter of 2009, and $54 in the fourth quarter of 2008.
    • Contract ARPU decreased sequentially and year-over-year due primarily to lower monthly recurring charges from contract customers, as the customer base moved to lower ARPU products, including unlimited rate plans.
  • Prepaid ARPU was $18 in the fourth quarter of 2009, down from $20 in the third quarter of 2009 and $23 in the fourth quarter of 2008.
    • The sequential and year-over-year decrease in prepaid ARPU is primarily due to proportionally fewer FlexPay no-contract customers.
  • Data services revenue (as defined in Notes 1 and 8 to the Selected Data, below) was $1.03 billion in the fourth quarter of 2009, representing 22.2% of blended ARPU, or $10.20 per customer, up from 21.1% of blended ARPU, or $10.00 per customer in the third quarter of 2009, and 18.5% of blended ARPU, or $9.30 per customer in the fourth quarter of 2008. Data services revenue increased 19% in 2009 compared to 2008.
    • 3.9 million 3G-capable converged devices (such as the T-Mobile® MyTouchTM 3G, T-Mobile® G1TM, Motorola CLIQ™, and BlackBerry® BoldTM 9700) were on the T-Mobile USA network at the end of the fourth quarter of 2009, an increase of almost 40% from the third quarter of 2009.
    • The increase of 3G-capable converged devices and the continued expansion and upgrade of the 3G network is driving Internet access revenue growth by the increasing adoption of 3G data plans.
    • Messaging revenue continued to be a significant component of data ARPU with customers moving from usage-based messaging plans towards unlimited plans.  The total number of messages carried on the network increased to 77 billion in the fourth quarter of 2009, compared to 75 billion in third quarter of 2009 and 57 billion in the fourth quarter of 2008.

CPGA and CCPU

  • The average cost of acquiring a customer, Cost Per Gross Add (“CPGA” as defined in Note 4 to the Selected Data, below) was $300 in the fourth quarter of 2009, up from $290 in the third quarter of 2009 and $270 in the fourth quarter of 2008.
  • The increase in CPGA compared to the third quarter of 2009 is primarily due to higher advertising costs related to the holiday season and the launch of the Even More and Even More Plus rate plans. Additionally, a change in the sales channel mix increased CPGA. Compared to the fourth quarter of 2008, the increase is primarily due to higher handset subsidies, as customers adopt more expensive converged devices.
  • The average cash cost of serving customers, Cash Cost Per User (“CCPU” as defined in Note 3 to the Selected Data, below), was $22 per customer per month in the fourth quarter of 2009, down from $23 in the third quarter of 2009 and down from $25 in the fourth quarter of 2008.
    • Sequentially, CCPU decreased due to lower network costs, including roaming and data content expense.
    • Year-over-year all components of CCPU (network costs, general and administrative, and subsidy loss unrelated to customer acquisition) decreased due to a higher proportion of non-branded customers incurring lower servicing costs and cost saving initiatives.

Capital Expenditures

  • Cash capital expenditures (as defined in Note 7 to the Selected Data, below) were $3.7 billion in 2009, compared to $3.6 billion in 2008 due to a continued focus on enhancing and expanding the national coverage of the UMTS/HSPA (3G) network.
  • Cash capital expenditures were $697 million in the fourth quarter of 2009, compared to $787 billion in the third quarter of 2009 and $895 million in the fourth quarter of 2008.
    • The decrease in cash capital expenditures in the fourth quarter of 2009 was primarily due to cash payment timing differences of the network build.
    • T-Mobile USA’s national 3G network now reaches 205 million people, almost doubling coverage in 2009. Furthermore, the entire 3G network was upgraded during the fourth quarter of 2009 to HSPA 7.2 Mbps (megabits per second).

Stick Together Highlights

  • On January 14, 2010, T-Mobile USA, announced the launch of the T-Mobile® myTouch™ 3G Fender™ Limited Edition, with legendary musician and Fender guitarist Eric Clapton to help unveil the exclusive new phone.
  • On February 16, 2010, T-Mobile USA announced the creation of a comprehensive mobile entertainment experience for the upcoming HTC HD2, available in the spring exclusively from T-Mobile USA.  The HTC HD2 offers the largest touch screen on a smartphone in the U.S. and will come ready with access to millions of eBooks, movies, television programs and more.

T-Mobile USA is the U.S. wireless operation of Deutsche Telekom AG (NYSE: DT). In order to provide comparability with the results of other US wireless carriers, all financial amounts are in US dollars and are based on accounting principles generally accepted in the United States (“GAAP”).  T-Mobile USA results are included in the consolidated results of Deutsche Telekom, but differ from the information contained herein as Deutsche Telekom reports financial results in Euros and in accordance with International Financial Reporting Standards (IFRS).

This press release includes non-GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP.  Reconciliations from the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below following Selected Data and the financial statements.

Since all companies do not calculate these figures in the same manner, the information contained in this press release may not be comparable to similarly titled measures reported by other companies.

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