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Growth Slowing At T-Mobile International

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image The number of mobile customers signing up for the services of Deutsche Telecom’s wireless unit T-Mobile International is slowing across some of the group’s most important markets. Though T-Mobile International closed the year with total net adds up 6.3 percent to 128.3 million year from the previous year, Q4 figures show a sharp slowdown—quite a worry, considering the unit is the company’s largest revenue generator. In a statement today, Deutsche Telecom said that T-Mob International added 1.68 million new mobile subscribers worldwide in the three-month period ending Dec. 31, less than half the 3.76 million additions it added a year ago. Even its U.S. unit, which has been a star performer for the group, saw additions slow, with net adds declining 35 percent in Q4 year on year. Still, not as bad as its UK and Dutch units, both of which actually lost customers. T-Mobile USA now has 32.8 million customers, including its February 2008 Suncom acquisition.

A Detusche Telecom spokesperson told us that some of the slowdown in Q4 could be attributed to the new way in which the company is required to count pre-paid customers in Germany, which saw the number of net adds decline 80 percent to 301,000 from 1.481 million a year ago. About 800,000-900,000 of the 1.179 million difference, he noted, had to be “eliminated” because of the new reporting rule, and shouldn’t be taken as a sign of the slowing economy. He added that, though it was not included in this data, the number of contract customers, a particularly valuable subset of customers for the company, was holding up better, due in part to the iPhone. He did not have any specific guidance on why the overall numbers were slowing in the U.S., despite T-Mobile USA being the first and sole carrier of the G1, or why the UK was actually bleeding customers. Deutsche Telekom (NYSE: DT) reports Q4 earnings on February 27.

Highlights From T-Mobile USA:

Net Adds Down: T-Mobile USA added 621,000 net new customers in Q4 2008, compared to 670,000 in the previous quarters, and 951,000 in the fourth quarter of 2007.

Post-Paid down, Pre-Paid up: The U.S.’s smallest operator added net new contract adds of 267,000 in Q4 2008, which represents 43 percent of the total number of net adds. This is a steep decline from a year ago, where the company added 733,000 contract customers, and even down from Q3 2008 when it added 293,000 post-paid customers.

Prepaid net additions were 355,000 in the fourth quarter of 2008, compared to 377,000 in the third quarter of 2008, and up from 218,000 in the fourth quarter of 2007.

Churn Up: Contract churn was 2.4 percent in the fourth quarter of 2008, stable from the quarter before and up from 1.8 percent in Q4 2007. Blended churn, including both contract and prepay customers, was 3.3 percent in the fourth quarter of 2008 and up from 3.0 percent in Q3 2008 and 2.8 percent in fourth quarter of 2007. T-Mob USA blamed higher contract churn on customers coming to the end of their two-year contracts first introduced in April 2006, and on “competitive intensity.”

Smartphones rising: During the year T-Mobile launched a couple of smartphones, including the G1 and the Samsung Behold. It reported that 40 percent of the devices sold to contract customers in Q4 2008 (including both upgrades and new customers) were converged devices, and that more than half were 3G enabled.

Jan 29, 2009 8:01 AM ET

Posted In: Gadgets, Companies, T-Mobile

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