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Post AT&T tryst, T-Mobile’s decline continues

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It’s now been two full quarters since its merger with AT&T was scuttled, but T-Mobile USA isn’t showing many signs of recovery. In the first quarter, T-Mobile looked like it might have reversed course, posting a modest 187,000 net customer gain, but in the second quarter it lost 205,000 subscribers, T-Mobile revealed Thursday in its earnings report.

As has been the case for the last two years, T-Mobile’s contract customers are departing. The problem is T-Mo couldn’t replace with them prepaid customers fast enough. T-Mobile lost 557,000 contract subscribers between April and June, offset by 227,000 net new prepaid subscribers.

The U.S. subsidiary of Deutsche Telekom also added 95,000 machine-to-machine connections, linking to its network to everything from point-of-sale payment devices to ice machines, and it gained 30,000 wholesale customers from its mobile virtual network operator partners such as TracFone’s (s amx) Straight Talk. But both numbers were far below the M2M and wholesale gains it reported in previous quarters.

In all, T-Mobile is a smaller operator today than it was a year ago, having shrunk by about 400,000 subscribers since June 2011.

The bright spot for T-Mobile is that its customers are taking to T-Mobile’s ultra-cheap data plans. It sold 2.1 million smartphones in the last quarter, a 31 percent increase over last year’s second quarter. Those new smartphones drove up the  average revenue per user (ARPU) spent on data by 14.6 percent for contract customers, though overall ARPU in postpaid increased only slightly to $57.35 a month. The continued shift of smartphones to prepaid plans, however, increased prepaid ARPU by 13.6 percent to $26.81 a month.

The lack of the iPhone(s aapl) is still weighing heavily on T-Mobile. Though it isn’t working outright miracles for Sprint(s s) since it arrived on its network last fall, the carrier has leaned on the iPhone to deliver quarterly subscribers boosts. The Apple device is responsible for many of the defections to Sprint from other carriers.

T-Mobile has made no official announcement on the iPhone, but it is in the process of overhauling its network, which will make its network completely iPhone-compatible by next year. The sooner it gets the device, though, the sooner it has a key weapon in fighting off its much larger competitors.

If you want to learn more about T-Mobile’s aggressive network plans, check out GigaOM’s Mobilize conference next month where T-Mobile CTO Neville Ray is speaking on Sept 21.

T-Mobile image courtesy of Flickr user swruler9284

7 Responses to “Post AT&T tryst, T-Mobile’s decline continues”

  1. Abbas Mirza

    Don’t see the writing on the wall but people are already planning to line up outside apple stores AGAIN for the next iPhone. Have not seen anything like these iPhone launches with any other device so @KnowItAll not sure if you are comparing ISO to Android or iPhone to other smartphones It seems you are comparing iPhone which is a device to android which is a OS. Do you understand the difference?

  2. Deepan Pathy

    iPhone, though is a lethal device for attracting subscribers but Apple demands a high device subsidy, which can give a serious dent to carrier’s operating margins. Given the cash crunch TMO is in, reducing wireless margins will be a serious threat to tackle.

  3. ricdesan

    The iPhone is more trouble than its worth and mostly irrelevant in the big picture. T-mobile garners my business because I dont feel nearly as gouged as I did with att, verizon or sprint. If they can continue to serve the core market that will not deal with the big guys, they will always have customers!

    • Bryce Bolling

      Nonsense! The iPhone, over the year, makes up about 50% of smart phone sales on the other three carriers. This can no longer be ignored. Since the next iPhone is expected to be massive it’s only going to get worse.

      This pulse the terrible Android offerings has got to be a major problem. The SIII is $80 more than everyone else for no reason. The note is finally being offered but will be outdated and way over priced in two weeks. Instead of grabbing a One X they go with the One S for the same price.

      They are doing it wrong

      • KnowItAll

        the problem is that the iphone is dead. Android is kicking it’s a$$ threetimes over. The iphone 5 is already a disappointment for it’s too small screen, different connector. The ecosystem is dwindling and people are switching in droves to Android.. add to that google functionality removed (such as the way superior maps) and you have a recipe for disaster. The writing is on the wall, the numbers show it.. Bryce your fanboy aura is clouding your judgment… wake up, smell the coffee… Apple is done, dead, gone, over.. most of their profit is iphone, and I5 sucks before it has even been released.. take that away … and Tmobile will be happy to not having strapped themselves to that old donkey…