(Source: Business Wire)
T-Mobile USA, Inc. ("T-Mobile USA") today reported third quarter of 2009
results. In the third quarter of 2009, T-Mobile USA reported OIBDA of
$1.56 billion, essentially in line with the second quarter of 2009 and
the third quarter of 2008, with an OIBDA margin of 33%. Additionally,
T-Mobile USA reported CCPU of $23, an increase in 3G capable converged
device users, and an increase in 3G coverage by almost 50% to 167
million people.
"In the quarter we took deliberate steps to align our operational cost
structure to market realities while reasserting our position as the
value leader in wireless," said Robert Dotson, president and CEO,
T-Mobile USA. "We've made tremendous progress with our nationwide
rollout of 3G. Over six months we will have almost doubled our
high-speed coverage with a goal of reaching 200 million consumers by the
end of December. That coverage is now accompanied by a rich data
experience with the broadest array of 3G Android devices of any wireless
carrier. Lastly, we've introduced our new Even More plans that can cut
wireless consumers' bills in half relative to AT&T and Verizon. These
plans make available affordable unlimited nationwide calling, texting
and data services to customers coast to coast."
"The building blocks are coming into place for our U.S. business to take
full advantage of the sizeable opportunities available to us in wireless
data," said Rene Obermann, CEO, Deutsche Telekom. "I am pleased with the
continued progress on building out our 3G network. The team has expanded
distribution, bringing T-Mobile products and services to more people in
more places. The team is also exercising sound cost management with a
focus on solid margins in a challenging environment."
Customers
T-Mobile USA served 33.4 million customers at the end of the third
quarter of 2009, down slightly from 33.5 million at the end of the
second quarter of 2009, but up from 32.1 million at the end of the
third quarter of 2008.
In the third quarter of 2009, total customers declined by 77,000,
compared to net customer additions of 325,000 in the second
quarter of 2009 and 670,000 in the third quarter of 2008. The
number of contract customers declined by 140,000 in the third
quarter of 2009.
Compared to the second quarter of 2009, the number of net new
customer additions decreased due to higher churn of contract
customers, as explained below.
The number of net new customer additions decreased compared to the
third quarter of 2008 due primarily to fewer gross customer
additions and higher churn from FlexPaysm customers.
Prepaid net customer additions, including wholesale customers, were
63,000 in the third quarter of 2009, down from 268,000 in the second
quarter of 2009 and 377,000 in the third quarter of 2008.
Lower wholesale net customer additions were the primary reason for
lower sequential prepaid additions. Wholesale customers totaled
1.6 million at September 30, 2009.
Contract customers comprised 80% of T-Mobile USA's total customer base
at September 30, 2009, compared to 81% in the second quarter of 2009
and 83% in the third quarter of 2008.
Churn
Contract churn was 2.4% in the third quarter of 2009, up from 2.2% in
the second quarter of 2009 and consistent with 2.4% in the third
quarter of 2008.
Contract churn increased in the third quarter of 2009 compared to
the second quarter of 2009, due in part to competitive intensity,
including handset innovation, and the seasonal impact from the
"back-to-school" window.
Blended churn, including both contract and prepaid customers, was 3.4%
in the third quarter of 2009, up from 3.1% in the second quarter of
2009 and 3.0% in the third quarter of 2008.
Sequentially and year-over-year prepaid churn increased in
particular due to wholesale and FlexPay no-contract.
OIBDA and Net Income
T-Mobile USA reported OIBDA of $1.56 billion in the third quarter of
2009, compared to $1.60 billion in the second quarter of 2009 and
$1.53 billion in the third quarter of 2008.
The sequential decrease in OIBDA was due primarily to lower ARPU,
as described below. Year-over-year OIBDA increased as lower
customer revenues were offset by lower customer acquisition costs
and lower costs of serving customers.
OIBDA margin (as defined in Note 6 to the Selected Data, below) was
33% in the third quarter of 2009, down slightly from 34% in the second
quarter of 2009 and improved from 31% in the third quarter of 2008.
Net income for the third quarter of 2009 was $417 million, compared to
$425 million in the second quarter of 2009 and $442 million in the
third quarter of 2008.
Revenue
Service revenues (as defined in Note 1 to the Selected Data, below)
were $4.73 billion in the third quarter of 2009, down from $4.77
billion in the second quarter of 2009 and $4.91 billion in the third
quarter of 2008.
The sequential and year-over-year decrease in service revenue in
the third quarter of 2009 was primarily due to the fall in ARPU,
as described below.
Total revenues, including service, equipment, and other revenues were
$5.38 billion in the third quarter of 2009, up from $5.34 billion in
the second quarter of 2009 and down from $5.51 billion in the third
quarter of 2008.
Sequentially, the increase was driven by higher equipment sales
revenue partially related to distribution growth and an expanded
data device lineup. Compared to the third quarter of 2008, higher
equipment sales revenues in the third quarter of 2009 were offset
by lower service revenues.
ARPU
Blended Average Revenue Per User ("ARPU" as defined in Note 1 to the
Selected Data, below) was $47 in the third quarter of 2009, down from
than $48 in the second quarter of 2009 and $52 in the third quarter of
2008.
Contract ARPU was $52 in the third quarter of 2009, in line with the
second quarter of 2009, but down from $55 in the third quarter of 2008.
Contract ARPU year-over-year decreased as growth in data services
was offset by fewer higher-ARPU customers due to competitive
intensity, customers moving to unlimited plans, and less roaming.
Prepaid ARPU was $20 in the third quarter of 2009, down from $21 in
the second quarter of 2009 and $24 in the third quarter of 2008.
The decrease in prepaid ARPU is due to fewer Flexpay no-contract
customers.
Data services revenue (as defined in Notes 1 and 8 to the Selected
Data, below) was $1.0 billion in the third quarter of 2009,
representing 21.1% of blended ARPU, or $10.00 per customer, up from
20.8% of blended ARPU, or $9.90 per customer in the second quarter of
2009, and 17.3% of blended ARPU, or $8.90 per customer in the third
quarter of 2008. Data services revenue increased 18% year-over-year.
2.8 million 3G-capable converged devices (such as the T-Mobile®
MyTouchTM, T-Mobile® G1TM, and
the T-Mobile® Dash 3GTM) were on the
T-Mobile USA network at the end of the third quarter of 2009, an
increase of 33% from the second quarter of 2009.
The increase of 3G-capable converged devices and the continued
build-out of the 3G network is driving internet access revenue
growth with the increased adoption of 3G data plans, offset
partially by a decrease in messaging revenue.
Messaging revenue continued to be a significant component of data
ARPU, with the total number of messages carried on the network
increasing to 75 billion in the third quarter of 2009, compared to
74 billion in second quarter of 2009 and 49 billion in the third
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 $290 in the
third quarter of 2009, up from $270 in the second quarter of 2009 and
in line with third quarter of 2008.
CPGA increased in the third quarter of 2009 compared to the second
quarter of 2009. This was primarily related to higher acquisition
costs due to increased customer adoption of 3G converged data
devices.
The average cash cost of serving customers, Cash Cost Per User ("CCPU"
as defined in Note 3 to the Selected Data, below), was $23 per
customer per month in the third quarter of 2009, in line with
the second quarter of 2009 and down from $25 in the third quarter of
2008.
Year-over-year CCPU decreased due to cost saving initiatives and
the customer base moving towards lower ARPU products which incur
lower servicing costs. Both of these items more than offset higher
network costs related to the 3G network build.
Compared to the third quarter of 2008, all components of CCPU
(network costs, general and administrative, and subsidy loss
unrelated to customer acquisition) decreased in absolute terms.
Capital Expenditures
Cash capital expenditures (as defined in Note 7 to the Selected Data,
below) were $787 million in the third quarter of 2009, compared to
$1.08 billion in the second quarter of 2009 and $956 million in the
third quarter of 2008.
The decrease in cash capital expenditures in the third quarter of
2009 was a result of timing of network build, with a continued
focus on enhancing and expanding the national coverage of the
UMTS/HSPA (3G) network during the quarter.
T-Mobile USA's 3G network now reaches 167 million people, and is
continuing to grow. Furthermore, the entire 3G network will be
HSPA 7.2 Mbps (megabits per second) enabled by year end.
In September, T-Mobile USA launched a trial of HSPA+ technology
with a maximum download speed of up to 21 Mbps in Philadelphia.
Stick Together Highlights
On August 13, 2009, T-Mobile USA achieved the highest ranking in a tie
for the J.D. Power and Associates 2009 Wireless Customer Care
Performance StudySM -- Volume 2. Since 2004, T-Mobile USA
has received the highest ranking, including two ties, in nine of the
last 10 Customer Care Performance Studies conducted by J.D. Power and
Associates.
In August T-Mobile USA's products and services started being offered
in more than 4,000 RadioShack stores across the U.S. and Puerto Rico,
almost doubling our national retail distribution network.
On September 17, 2009, T-Mobile USA received the highest ranking among
national wireless carriers in the J.D. Power and Associates 2009
Wireless Retail Sales Satisfaction StudySM -- Volume 2. The
award further reflects T-Mobile's continued achievements for overall
customer experiences, whether in-store, online or on the phone.
On October 21, 2009, T-Mobile USA announced the fourth
quarter of 2009 availability of the BlackBerry® Bold 9700
with Wi-Fi Calling from T-Mobile. It will be the first 3G-powered
BlackBerry smartphone available through T-Mobile USA, adding to the
holiday lineup of 3G converged devices such as the T-Mobile®
myTouchTM and recently announced Samsung Behold® II.
Additionally, on November 2, 2009, T-Mobile USA launched the national
availability of the MotorolaTM CLIQTM. This is
the first AndroidTM-powered device with MOTOBLURTM,
a solution developed to manage and integrate communication sources
together on the home screen.
On October 25, 2009, T-Mobile USA unveiled its new Even More' and
Even More Plus' rate plans. These plans respond to customers needs
for affordable nationwide calling, texting, and data plans; while
providing new ways to get new phones and data devices with equipment
installment plans.
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.
SELECTED DATA FOR T-MOBILE USA
Full
Year
(thousands) Q3 09 Q2 09 Q1 09 2008 Q4 08 Q3 08
Customers, end of period(2) 33,420 33,497 33,173 32,758 32,758 32,136
Thereof contract customers 26,882 27,022 26,966 26,806 26,806 26,539
Thereof prepaid customers 6,538 6,475 6,207 5,952 5,952 5,597
Net customer (losses) / additions (77) 325 415 2,940 621 670
Acquired customers - - - 1,132 - -
Minutes of use/contract customer/month 1,160 1,150 1,130 1,150 1,130 1,140
Contract churn 2.40% 2.20% 2.30% 2.10% 2.40% 2.40%
Blended churn 3.40% 3.10% 3.10% 2.90% 3.30% 3.00%
($)
ARPU (blended)(1) 47 48 48 51 50 52
ARPU (contract) 52 52 52 55 54 55
ARPU (prepaid) 20 21 21 23 23 24
Data ARPU (blended)(8) 10.00 9.90 9.40 8.90 9.30 8.90
Cost of serving (CCPU)(3,9) 23 23 24 25 25 25
Cost per gross add (CPGA)(4) 290 270 300 290 270 290
($ million)
Total revenues 5,380 5,342 5,398 21,885 5,722 5,506
Service revenues(1) 4,733 4,766 4,774 19,242 4,904 4,911
OIBDA(5) 1,556 1,601 1,383 6,123 1,568 1,531
OIBDA margin(6) 33% 34% 29% 32% 32% 31%
Capital expenditures(7) 787 1,078 1,125 3,603 895 956
-------------------------------------------------------------------------------
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.
1 Average Revenue Per User ("ARPU") represents the average monthly service revenue we earn from our customers. ARPU is calculated by dividing service revenues for the specified period by the average customers during the period, and further dividing by the number of months in the period. We believe ARPU provides management with useful information to evaluate the revenues generated from our customer base.
Service revenues include contract, prepaid, and roaming and other service revenues, and do not include equipment sales and other revenues. Data services revenues (including messaging and non-messaging revenue) are a component of service revenues. Within the consolidated financial statements below, other revenues include co-location rental income and, through 2008, wholesale revenues from the usage of our network in California, Nevada, and New York by AT&T customers, among other items, and are therefore not included in ARPU.