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November 09, 2012

T-Mobile Hemorrhaging Cash, Customers

By Steve Anderson, Contributing TMCnet Writer

The quarterly reports keep coming out, and for T-Mobile (News - Alert), they’re sounding less like a clarion call to buyers and more like a death knell. The fourth-largest carrier in the United States had a lot of bad news to bring along for its quarterly report, but not without a bit of hope for the future.

The news coming out of T-Mobile's quarterly report was generally terrible. The carrier admitted to the loss of 492,000 contract customers in the third quarter, and a revenue drop of 6.4 percent to $4.9 billion.

Sales of devices actually stepped in to help stem some of the losses from service revenue – which themselves were down fully 8.7 percent – but the news was still of limited impact.

Moreover, that 492,000 customer loss does represent an improvement over the prior quarter, where T-Mobile lost 557,000 customers, but it represents a significant jump over this time last year in which they lost 389,000.

Losing just over a million customers in six months is not exactly a bell-ringer as far as buyers go, and investors responded appropriately. While T-Mobile's share price was, at last report, off the daytime lows, it's still looking to come out down for the day barring some kind of unusual event.

The biggest issue T-Mobile cited in its race to the bottom was its lack of an iPhone 5 to sell at launch, especially in light of the fact that all three of its primary competitors in the field – Verizon, AT&T and Sprint (News - Alert) – all carry versions of the iPhone 5, giving T-Mobile a significant disadvantage considering how brisk sales of the iPhones commonly are when they emerge.

But T-Mobile is holding out a note of hope with its merger plans with MetroPCS. Despite the fact that MetroPCS reportedly uses a different kind of network than T-Mobile, both companies look to be moving in the same direction – LTE (News - Alert) – and should the two get there approximately at the same time, the end result would likely be a positive one and give the unified company a little extra breathing room in the market.

For now, though, things are not going well for T-Mobile, and hopefully it can stage some kind of recovery effort before the field shrinks to three. The firm’s going to need to find a way to get customers back in the door and out of the doors of their competition if it expects to hold its ground, and gain some back, to keep its numbers shored up and its presence overall viable.

Edited by Braden Becker
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