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

May 2, 2014
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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.

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