T-Mobile USA Reports Fourth Quarter and Full Year 2009 Results

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* T-Mobile USA served 33.8 million customers at the end of the fourth quarter of 2009, up from 33.4 million at the end of the third quarter of 2009 and 32.8 million at the end of the fourth quarter of 2008.
o In the fourth quarter of 2009, total customers increased by 371,000, compared to net customer losses of 77,000 in the third quarter of 2009 and 621,000 net new customers in the fourth quarter of 2008.
o Compared to the third quarter of 2009, the number of net new customer additions increased due primarily to T-Mobile branded customer additions (contract and prepaid wireless customers excluding wholesale and machine-to-machine customers). Branded customer additions benefited from strong holiday sales and the launch of the new Even More and Even More Plus rate plans during the quarter. The Even More and Even More Plus rate plans offer industry-leading value with features including unlimited nationwide voice, text and data services, and include rate plans with and without contracts and subsidized handsets.
o Net contract customer losses were 117,000 in the fourth quarter of 2009, compared to 140,000 net contract customer losses in the third quarter of 2009 and net contract customer additions of 267,000 in the fourth quarter of 2008. The underlying mix of contract customer additions improved compared to the third quarter of 2009, with a smaller proportion of lower-ARPU contract additions during the fourth quarter of 2009.
o The decrease in total and contract customer additions compared to the fourth quarter of 2008 was due primarily to fewer FlexPaysm customer additions.

* Prepaid net customer additions, including wholesale customers, were 488,000 in the fourth quarter of 2009, up from 63,000 in the third quarter of 2009 and 355,000 in the fourth quarter of 2008.
o Higher wholesale net customer additions were the primary reason for the sequential and year-on-year increase in prepaid additions. Wholesale customers totaled 2.0 million at December 31, 2009.
* Contract customers comprised 79% of T-Mobile USA’s total customer base at December 31, 2009, compared to 80% in the third quarter of 2009 and 82% in the fourth quarter of 2008.

Churn

* Blended churn, including both contract and prepaid customers, was 3.3% in the fourth quarter of 2009, down slightly from 3.4% in the third quarter of 2009 driven by improved prepaid churn, and in line with the fourth quarter of 2008.
* Contract churn increased in the fourth quarter of 2009 to 2.5% from 2.4% in the third quarter of 2009 and fourth quarter of 2008.
* Prepaid churn, including FlexPay no-contract, was 6.8% in the fourth quarter of 2009, a decrease from 7.4% in the third quarter of 2009 due in part from the success of the new Even More Plus rate plans and seasonality.

OIBDA and Net Income

* T-Mobile USA reported OIBDA of $1.38 billion in the fourth quarter of 2009, compared to $1.56 billion in the third quarter of 2009 and $1.57 billion in the fourth quarter of 2008.
* The sequential decrease in OIBDA was due primarily to seasonally higher acquisition costs related to branded customer additions, a higher proportion of additions through more expensive retail channels, and higher advertising costs in connection with the launch of the new Even More rate plans and the holiday sales season.
* Year-over-year OIBDA decreased due primarily to lower contract customer revenues as described below.
* OIBDA margin (as defined in Note 6 to the Selected Data, below) was 30% in the fourth quarter of 2009, down from 33% in the third quarter of 2009 and 32% in the fourth quarter of 2008.
* Net income in the fourth quarter of 2009 was $306 million, compared to $417 million in the third quarter of 2009 and $483 million in the fourth quarter of 2008.

Revenue

* Service revenues (as defined in Note 1 to the Selected Data, below) were $4.65 billion in the fourth quarter of 2009, down from $4.73 billion in the third quarter of 2009 and $4.90 billion in the fourth quarter of 2008.
o The sequential and year-over-year decrease in service revenues in the fourth quarter of 2009 was primarily due to a change in the customer mix, including an increase in wholesale customers.
* Total revenues, including service, equipment, and other revenues were $5.41 billion in the fourth quarter of 2009, up from $5.38 billion in the third quarter of 2009 but down from $5.72 billion in the fourth quarter of 2008.
o Sequentially, the increase was driven by higher equipment sales related to increased volume of more expensive data devices, offset partially by lower service revenues. Compared to the fourth quarter of 2008, the decrease was driven by lower service revenues as described above. Also, total revenues in the fourth quarter of 2008 benefited from revenue related to the migration of AT&T’s customers to its own network following the dissolution of a network sharing venture.

ARPU

* Blended Average Revenue Per User (“ARPU” as defined in Note 1 to the Selected Data, below) was $46 in the fourth quarter of 2009, down from $47 in the third quarter of 2009 and $50 in the fourth quarter of 2008.

* Contract ARPU was $51 in the fourth quarter of 2009, down from the $52 in the third quarter of 2009, and $54 in the fourth quarter of 2008.
o Contract ARPU decreased sequentially and year-over-year due primarily to lower monthly recurring charges from contract customers, as the customer base moved to lower ARPU products, including unlimited rate plans.
* Prepaid ARPU was $18 in the fourth quarter of 2009, down from $20 in the third quarter of 2009 and $23 in the fourth quarter of 2008.
o The sequential and year-over-year decrease in prepaid ARPU is primarily due to proportionally fewer FlexPay no-contract customers.
* Data services revenue (as defined in Notes 1 and 8 to the Selected Data, below) was $1.03 billion in the fourth quarter of 2009, representing 22.2% of blended ARPU, or $10.20 per customer, up from 21.1% of blended ARPU, or $10.00 per customer in the third quarter of 2009, and 18.5% of blended ARPU, or $9.30 per customer in the fourth quarter of 2008. Data services revenue increased 19% in 2009 compared to 2008.
o 3.9 million 3G-capable converged devices (such as the T-Mobile® MyTouchTM 3G, T-Mobile® G1TM, Motorola CLIQ™, and BlackBerry® BoldTM 9700) were on the T-Mobile USA network at the end of the fourth quarter of 2009, an increase of almost 40% from the third quarter of 2009.
o The increase of 3G-capable converged devices and the continued expansion and upgrade of the 3G network is driving Internet access revenue growth by the increasing adoption of 3G data plans.
o Messaging revenue continued to be a significant component of data ARPU with customers moving from usage-based messaging plans towards unlimited plans. The total number of messages carried on the network increased to 77 billion in the fourth quarter of 2009, compared to 75 billion in third quarter of 2009 and 57 billion in the fourth quarter of 2008.

T-Mobile USA Reports Fourth Quarter and Full Year 2009 Results | Business Wire