The day after Verizon Wireless posted another LTE network disruption, T-Mobile announced plans to invest $4 billion in its own 4G network. T-Mobile plans to launch a high-speed LTE network in 2013 in hopes of stopping a near-mass exodus of customers to competing carriers.
T-Mobile calls it its "challenger strategy," and plans include deploying advanced hardware at 37,000 cellular sites. T-Mobile said it would tap into the wireless spectrum band AT&T is offering as part of their merger-kill agreement, if the Federal Communications Commission approves the transfer.
"Though we are not satisfied with the contract customer losses and the decreased total revenues, the quarterly margin improvement year-on-year was impressive," said Rene Obermann, CEO of Deutsche Telekom, T-Mobile's parent company. "The spectrum gained through the break-up fee empowers T-Mobile USA to start LTE-based services in key U.S. markets and strengthens its competitiveness."
Blaming iPhone 4S
T-Mobile has to do something. Deutsche Telekom was betting heavily on the AT&T merger to pan out as the carrier continued to bleed market share -- and the bleeding hasn't stopped. T-Mobile lost 802,000 customers in the fourth quarter of 2011. That compares with a loss of 251,000 in the year-ago period.
The churn affected T-Mobile's revenues, albeit only slightly. T-Mobile posted $5.2 billion in fourth quarter 2011 revenues, compared with $5.4 billion in the year-ago period. On the year, total sales dipped 3.3 percent year-over-year to $20.6 billion.
T-Mobile pointed to negative impacts in the fourth quarter from the iPhone 4S launch at AT&T, Verizon Wireless and Sprint. As the only major U.S. carrier without an iPhone in play, T-Mobile is an underdog in the smartphone wars.
"Not carrying the iPhone led to a significant increase in contract deactivations in the fourth quarter of 2011," said Philipp Humm, CEO and president of T-Mobile USA. "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."
Making Up for Lost Ground
Jeff Kagan, a telecom analyst in Atlanta, is not surprised by the customer bleeding or the $4 billion investment. Many analysts expected T-Mobile to make a big move with the multibillion-dollar break-up fee it received from AT&T. (continued...)