T-Mobile USA loses subscribers but gains smartphones

A growing number of high-end devices helped boost data revenue in the fourth quarter

T-Mobile USA suffered a net loss of 23,000 customers in the fourth quarter but gained 1 million smartphone users, which helped to increase the data revenue that the carrier pulled in from an average subscriber.

The fourth-largest mobile operator in the U.S. ended 2010 with 33.73 million customers, down from 33.76 million in the third quarter. Its additions of traditional postpaid customers fell in the quarter, primarily because of revised credit standards and "competitive intensity," T-Mobile said in a press release. T-Mobile's service revenue rose just 0.9 percent from a year earlier, and its net income dropped to $268 million from $306 million in the fourth quarter of 2009.

The bright spot for the company, the U.S. wireless operation of Deutsche Telekom, was consumer migration to smartphones that rely on data plans. At the end of the quarter, there were 8.2 million T-Mobile subscribers using smartphones, representing a net increase of 1 million from the third quarter. Meanwhile, average revenue per user (ARPU) from data services rose to $12.80 per month, up 25.5 percent from the fourth quarter of 2009. Overall ARPU for both postpaid and prepaid customers was up only slightly from a year earlier.

Even as the carrier continues to introduce new handsets and roll out a fast HSPA+ (High-Speed Packet Access) network, it faces even tougher competition from mobile giants AT&T and Verizon. Both now offer Apple iPhones, and Verizon last year launched an LTE (Long Term Evolution) network with downstream speeds between 5M bps (bits per second) and 12M bps. Sprint Nextel, the nation's third-largest carrier, offers service over Clearwire's WiMax network with advertised speeds nearly as high. Both of those fast networks reach more than 100 million U.S. residents.

T-Mobile has countered these speed gains with a network based on HSPA+ (High-Speed Packet Access), which the carrier said on Friday reaches 200 million Americans. The company has said its HSPA+ network can deliver speeds of 21M bps and will be upgraded to 42M bps this year. Though those are theoretical speeds and average users are likely to receive less throughput, the new infrastructure could make T-Mobile more competitive against the other major U.S. carriers. Last month, T-Mobile said it also plans to stem subscriber defections by improving in-home coverage offering low-cost smartphone options.

Last month, AT&T reported a record net gain of 2.8 million subscribers in the fourth quarter, including 4.1 million iPhone activations, to reach 95.5 million customers. Verizon Wireless said it added 803,000 retail subscribers during the quarter and had 102.2 million mobile customers at the end of the year, before it had even introduced its version of the iPhone.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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