T-Mobile USA suffers heavy postpaid losses

By Pamela Weaver

T-Mobile’s US-based service revenue might have risen for the first time in six quarters but it continues to haemorrhage customers in America. Net losses of high-value contract customers – to the tune of 318,000 – have put a dampener on an increase of 295,000 prepaid users and a 0.9 percent year on year increase in revenue for the last quarter of 2010.

Speaking at a press conference last week, Deutsche Telekom CEO Rene Obermann said that churn levels remained too high for the company in America, pointing the finger of blame at the poor image of the company’s network and its inability to offer the iPhone. The telco lost exclusivity on the device in Germany last year while in America, Verizon’s recent arrival at the iPhone party has put further pressure on smaller players such as T-Mobile, who are still unable to offer it. The lack of ability to offer a device that traditionally attracts high-spending users continues to dog T-Mobile in the States.

T-Mobile is the smallest of the four chief carriers in America but chief financial officer Timotheus Hoettges has ruled out any notion of Deutsche Telekom cutting its losses and canning its operations there. According to Hoettges, billions of dollars in spectrum investment will be required in the coming years; revenue for this will, in part, come from the sale and lease-back of the telco’s 7,000 cellular towers, which is expected to begin in the second quarter of 2011 and generate in excess of $1bn. Hoettges said that this strategy would allow the company’s American operations to feed their own profitable growth rather than continually relying on investment from its German parent operation.