T-Mobile reports lower net income for fourth quarter

T-Mobile, the nation's fourth largest cellular carrier, added 317,000 new customers on a net basis in the fourth quarter of 2009. That was a sharp increase from the net loss of 77,000 customers that was reported for the prior three months. However, most of those new accounts were not opened by those signing contracts. On a net basis, contract customers dropped by 117,000 in the fourth quarter. That is an improvement of the 140,000 contract customers that T-Mobile lost in the third quarter. In the fourth quarter of 2008, the carrier added a net total of 267,000. At the end of the year, T-Mobile had 33.8 million customers, up from 32.8 million at the end of 2008. Despite adding customers, the cost of acquiring those customers and for advertising led the company to report a lower net income of $306 million for the last 3 months of the year. That compares to third quarter earnings of $417 million and year ago profits of $483 million. Revenue was $5.41 billion in the last 3 months of last year, up from the $5.38 billion that came in during the third quarter and down from the year earlier figure of $5.72 billion.

Part of the reason for the drop in earnings despite customer additions was the drop in contract Average Revenue Per User (ARPU) to $51 per month. That compares with the $52 monthly average for the third quarter and the $54 average for the 2008 period. Another reason for the earnings decline was the increase in the cost of acquiring a customer to $300 from $290 in the previous three month period and $270 a year ago. René Obermann, CEO of T-Mobile USA's parent company, Deutsche Telekom, said, "T-Mobile USA made significant progress in 2009 in expanding its 3Gnetwork, improving its 3G-capable device lineup, enhancing itsdistribution, and underscoring its value proposition. This creates asolid foundation to benefit from the robust mobile Internet market." The next earnings report will be the first to include any impact from the Nexus One. While Google is selling the handset on its web site, right now service is provided by only T-Mobile. On March 24th, the carrier is expected to launch the sizzling hot HTC HD2 which won't have any major impact until the company's second quarter report.

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source: Yahoo