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T-Mobile USA Q2 financial report reveals bittersweet results

August 9, 2012

After several consecutive quarters of significant financial losses, in the last few months T-Mobile seemed to be able to gear away from the road to perdition. The number four carrier in the United States went for a pretty inspired image re-branding, introduced a far more attractive pricing structure for prepaid mobile broadband plans, and even strengthened its high-end phone portfolio with Samsung’s highly successful Galaxy S3.

The results? Well, let’s just say they aren’t as bad as others, but they’re clearly bittersweet, at best. According to the latest financial report made public by T-Mo USA earlier today, the carrier’s net income over Q2 2012 was up 3.5% over its Q1 figure.

Promising, right? Not exactly, because the $207 million banked by T-Mo between April and June 2012 didn’t manage to tie up the carrier’s net income from Q2 2011, which had been of $212 million.

Looking at the number of subscribers, the things are even worse, with T-Mobile losing no less than 557,000 customers on postpaid plans, up from 510,000 in the first quarter of 2012 and 536,000 in Q2 2011. However, and this is where it gets interesting, it seems that Magenta has managed to add 227,000 customers on prepaid plans between April and June, compared with 71,000 user losses in the second quarter of 2011.

That brings T-Mo’s general user count to a net loss of only 205,000 customers over the past quarter, which is not that bad, given the carrier’s recent track record. To continue on the bittersweet note, though, the number of new prepaid customers has in fact been smaller in Q2 2012 than the previous financial quarter, when 249,000 new people opted for T-Mo’s plans.

In terms of total service revenues, Magenta reported a 5.2% year-on-year decrease, from $4.6 billion to $4.4, which is not very encouraging, but the number was equal to the one reported in Q1 2012. ARPU (average revenue per user) increased both for prepaid and postpaid customers (13.6% year-on-year for the formers and 14.6% for the latters), bringing the combined ARPU down, however, from $44.52 in Q1 2012 and $45.86 in Q2 2011 to $43.88 in the last quarter. That might sound a bit bizarre, but it actually makes sense, as prepaid plans, which have grown significantly for the carrier, bring T-Mobile significantly less money than people on postpaid contracts.

Finally, when talking about actual smartphone sales, T-Mobile has the most important reasons to be optimistic. The carrier has sold 2.1 million 3G/4G devices in Q2 2012, up 31% year-on-year. However, that still isn’t a whole lot and it has most likely been driven up by Galaxy S3 sales.

All in all, the latest T-Mobile financial report can’t really help us draw a conclusion on the carrier’s long-term future. However, it’s clear that T-Mo still needs to step it up, both in terms of plan pricing structure and when it comes to the number of phones offered for sale. Not to mention that they absolutely need to get a move on their 4G LTE network. That’s just my two cents, but feel free to disagree with me in the comments section below.