T-Mobile Reports Fourth Quarter 2011 Operating Results

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[Techtaffy Newsdesk]

In the fourth quarter of 2011, T-Mobile USA reported service revenues of $4.57 billion, down from $4.69 billion in the fourth quarter of 2010, and adjusted OIBDA of $1.40 billion, up from $1.34 billion reported in the fourth quarter of 2010.  Blended ARPU in the fourth quarter of 2011 was $46, consistent with the fourth quarter of 2010.  Additionally, net customer losses were 526,000 in the fourth quarter of 2011, compared to 23,000 net customer losses in the fourth quarter of 2010.

 

Philipp Humm (CEO and President, T-Mobile USA):  Not carrying the iPhone led to a significant increase in contract deactivations in the fourth quarter of 2011. In 2012 and 2013, T-Mobile USA will invest to get the business back to growth, including an incremental $1.4 billion investment in its network modernization initiative, which will total a $4 billion investment over time.


Total Customers: T-Mobile USA served 33.2 million customers at the end of fourth quarter 2011, compared to 33.7 million customers at both the end of third quarter 2011 and the end of fourth quarter 2010.

Fourth quarter 2011 net customer losses of 526,000, compared to net customer additions of 126,000 in the third quarter of 2011, and net customer losses of 23,000 in the fourth quarter of 2010.

The sequential and year-on-year increase in customer losses is a result of intense competitive pressure from the launch of the iPhone 4S by three nationwide competitors in the fourth quarter of 2011, says the company.  In addition, higher connected device deactivations contributed significantly to the net customer loss in the fourth quarter of 2011, including a nearly 265,000 deactivation related to one customer with a yearly service revenue impact of less than $1 million.

 

René Obermann (CEO, Deutsche Telekom): Though we are not satisfied with the contract customer losses and the decreased total revenues, the quarterly margin improvement year-on-year was impressive.  The spectrum gained through the break-up fee empowers T-Mobile USA to start LTE-based services in key US markets and strengthens its competitiveness.

 

Adjusted OIBDA: T-Mobile USA reported Adjusted OIBDA of $1.40 billion in the fourth quarter of 2011, compared to $1.45 billion in the third quarter of 2011 and $1.34 billion in the fourth quarter of 2010.

Adjusted OIBDA margin was 31% in the fourth quarter of 2011, consistent with the third quarter of 2011 and up from 29% in the fourth quarter of 2010.

Year-on-year OIBDA margin improved primarily due to the reductions in equipment subsidies in connection with the new unlimited Value plans.

T-Mobile USA is currently performing its annual assessment of the indefinite-lived assets recorded in its financial statements.  T-Mobile USA anticipates that it will record a material non-cash impairment charge related to its indefinite-lived assets for the fourth quarter of 2011.  Any such charge would have no affect on either the Company’s current cash balance or future cash flows.  T-Mobile USA expects to include full financial statement results for the fourth quarter of 2011 in the earnings release for the first quarter of 2012 as a comparative period.

Adjusted OIBDA in the fourth quarter of 2011 and the third quarter of 2011 excludes AT&T transaction-related costs of $123 million and $51 million, respectively, primarily consisting of employee-related retention benefit expenses.

Sequentially, adjusted OIBDA decreased as a result of lower service revenues driven by branded customer losses and higher customer acquisition expenses.  This was offset by lower network operating expenses.  Third quarter of 2011 adjusted OIBDA had also benefitted by $29 million in connection with the discontinued retail partnership with RadioShack.

Year-on-year, adjusted OIBDA increased as a result of reduced losses from equipment subsidies due to the launch of the unlimited Value plans and continued cost management programs. Fourth quarter 2011 operating expenses, excluding the cost of equipment sales, remained consistent sequentially and year-on-year as cost savings programs in 2011 helped control expense growth.

Revenue : Service revenues were $4.57 billion in the fourth quarter of 2011, down from $4.67 billion in the third quarter of 2011 and $4.69 billion in the fourth quarter of 2010.

Sequentially and year-on-year, quarterly service revenues decreased primarily due to contract customer losses, which were partially offset by the increased adoption of data plans in the contract and prepaid customer base.  Additionally, year-on-year service revenues were positively impacted by growth in revenues from providing handset insurance services to customers, which were insourced in the fourth quarter of 2010 and reconnection fees, which were introduced in the third quarter of 2011.

Service and Sales revenues were $5.1 billion in the fourth quarter of 2011, down from $5.2 billion in the third quarter of 2011 and $5.3 billion in the fourth quarter of 2010.

ARPU: Blended Average Revenue Per User was $46 in the fourth quarter of 2011, consistent with both the third quarter of 2011 and the fourth quarter of 2010.

Capital Expenditures: Cash capital expenditures were $2.7 billion in 2011, compared to $2.8 billion in 2010. In 2011, cash capital expenditures were driven by the continued build-out of the HSPA+ 21 and HSPA+ 42 networks.

Cash capital expenditures were $551 million in the fourth quarter of 2011, compared to $741 million in the third quarter of 2011 and $828 million in the fourth quarter of 2010.

Upload: 02-25-12