T-Mobile attracted 371,000 subscribers to its struggling wireless service in Q4, but still has a long road ahead as it must deal with lower revenue from an increase in prepaid wireless subscribers.
T-Mobile, Deutsche Telekom's North America subsidiary, now has 33.8 million customers across the United States, but still struggles with signing on new two-year subscribers. Despite 371,000 new subscribers, T-Mobile still lost 117,000 net contract customers who fled to other carriers.
Furthermore, the company added 488,000 prepaid customers during Q4, which is a significant increase over the mere 63,000 prepaid subscribers picked up during Q3 2009. Even with the significant number of new prepaid users, more than 79% of those signed up are currently under contract with the company.
The T-Mobile no contract phone plan, unveiled in early October 2009, offers unlimited talk, text and data for just $79.99 per month. Even though the price tag is 20% lower than the normal two-year contract, potential customers must purchase a phone for an unsubsidized price.
The average T-Mobile wireless subscriber paid $47 per month for their phone bill in Q4, but the lack of new two-year customers has left analysts unimpressed. T-Mobile also has had trouble convincing consumers to sign up for the more profitable data and texting plans.
Both T-Mobile and Sprint-Nextel, despite offering additional perks and lowering prices, still have been unable to compete with AT&T and Verizon Wireless. Sprint is currently the No. 3 US wireless carrier, with T-Mobile still trailing in the No. 4 position, industry research indicates.
I think this will be a very interesting challenge for T-Mobile, especially as the company continues to trail AT&T, VZW, and Sprint. The company's net income last Q4 was $306 million -- a significant drop from the $483 million it earned during Q4 in 2008.
The Google Nexus One should give T-mobile a boost for 1Q 2010, but to really attract subscribers, they need to severely improve their fledgling 3G data service.
