T-Mobile lost $100M due to ETFs of switching customers

May 2, 2014

TMobile Switch

During the first quarter of 2014, T-Mobile gained the most new subscribers amongst Tier 1 carriers. One of the reason for this increase was due to the carrier’s offer to pay up to $650 in Early Termination Fees to customers who switched to T-Mobile.

T-Mobile said in a filing recently that the ETF amounts cost the company around $100 million in revenue in the first quarter. T-Mobile said around 21 percent of its 1.32 million branded postpaid customer additions in the quarter took advantage of its ETF offer. Overall, T-Mobile had a net loss of $151 million for the first quarter, down from a profit of $107 million in the first quarter of 2013.

According to a Seeking Alpha transcript of the event, Carter said the ETF offer “will pay massive dividends in the future, given the quality of customers that we’re bringing on–remember, we previously talked about two-thirds, roughly two-thirds, of the flow that we’re getting on the ETF offer are the very highest credit quality customers that have the longest tenure with us.”

Thankfully, T-Mobile CEO John Legere was not deterred by the losses and stated that this promotion was something that would continue for the foreseeable future.

Comments

  • numbskull

    Wait till the switchers realize what crap service they switched to.

    • Joel

      Switched 2 months ago and couldnt be happier!!

    • satsmine2k4

      Switched 2 months ago from at&t and all the services are on par with at&t except for LTE speeds.
      My area at&t avgs 18-20mbps, t-mobile 11-14mbps of UNLIMITED DATA, i can live with THAT…

    • dkbnyc

      Yep, ALL this super fast cheap LTE I getting. How do I put up with this crap 18m I’m getting. Oh well. Just have to deal with it

    • jbworldwide1

      Switched in January. So far, so excellent!

    • Brian

      Switched and am happier with faster service, great customer service and saving over $100 a month

    • Simon Belmont

      I switched nearly a year ago. It’s been great. Fast speeds, transparent billing, and continual efforts from T-Mobile to raise the bar.

      Oh, and I’m paying less now than I was a year ago. I’m quite happy.

    • Joe

      Switched last year and now I recommend it to everyone.

      #REKD

    • Mo Yang

      Yes. “Crap service” indeed…Maybe, just maybe, the people that do actually switch are in a coverage area. They have a smaller foot print but their service is better than the competition.

    • John Garlits

      Lol, your name says it all! Depends on where you are, and it can only get better from here. It fits my needs just fine, and for the price I used to pay Verizon and be stuck with an old-ass GNex they slowed every update for and just left off the last one (or else upgrade and get stuck another 2 years), I have an LG G2 for nothing down, full insurance plus subscription to Lookout, recently bumped UP data allotment, no worries about going over minutes or texts in those rare months when I travel, actually no worries about going over on data, and I can leave anytime I don’t like it anymore! I can also go deep into a structure where there is no cell signal for anyone and make calls, texts and the rest over WiFi.

  • Reallytho

    I’m glad I switched from Vzw my service has no hiccups and its wayyyy cheaper and actually faster than my old service

  • HitokiriX

    Sounds worth the loss.

    • Arturo Raygoza

      it is, they wouldn’t have done it if they weren’t going to make huge profits

  • Arturo Raygoza

    now you gotta subtract that from the future profits from all those new customers

  • Shawn

    I switched from Sprint a few months ago and never looked back. Better voice quality, literally no drpped calles yet and a lot faster data speeds.

  • sbaydoun28

    F**k t-mobile

    • Mr Mop

      Why?

      • Mo Yang

        I think essentially what he is saying is “*bleep* competition,” and thinks there should only be a duopoly.

  • Bama501

    I signed up with T- mobile one time. The store was less than a mile from my house. I had great reception at the store but none at my house. I went back the next day and canceled and have been with Verizon ever since and love it.

  • Phillip Bee

    Its a long time investment .. The average customer will still stay for 2 yrs after switching because other carriers arent going to pay the Tmo EIP. They will get there money back in the 2nd yr. Not including late fees, restoral fees, shipping fees, amongst many maany other one time fees that every company that provides a service has.

    • John Garlits

      Actually, I can leave Tmo anytime I want. No contract!

      • Phillip Bee

        Nowhere in there did I state you couldn’t leave anytime. As I Tmo customer I’m well aware of that too .. yaaay for us w/ our no contract-contract plans ; )

        • John Garlits

          My bad, thought you were referring to something different.

  • vikings football

    100mil loss? i see this as a 100mil marketing = profit in the long run

    btw, i was a verizon customer, switched to tmobile and have loved my 20+ down speed and unlimited data…because it allowed me to cancel my cable and internet service and save over 100.00/mo…being that now im able to just enjoy the programs i want to watch via netflix, hulu plus, crackle, youtube and a bunch of other streaming sites at my disposal…all of this on my GPE sony ultra z’s big screen ;o)

    for those people who say 6.44 inch is too big, i beg to differ ;o)

    • leadfoote

      That’s what she said.

  • http://www.KamilGPhotography.com/ KamilG225

    I contributed well to this $100M loss. They paid an ETF from a 2 day-old contract with Sprint…on a family of 4.

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