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