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T-Mobile's profits fall as it loses another 492,000 contract customers

T-Mobile Germany (STOCK)

Beleaguered mobile provider T-Mobile USA has released its quarterly earnings report, and long story short, everything is down. While the company was able to add 160,000 net customers, the number of more lucrative postpaid customers dropped by 492,000, causing the average revenue per user (ARPU) to drop to $42.78 — a decrease of 7.4 percent from the same time last year, and more than $20 less than competitors AT&T and Sprint. (Because of its new Share Everything data buckets, Verizon has stopped reporting ARPU). In the end, T-Mobile posted a 15.2 percent lower profit than it did in Q3 of 2011 — $1.2 billion before depreciation and its whopping $8.1 billion impairment charge. The charge stems from parent company Deutsche Telekom’s decision to merge T-Mobile USA and Metro PCS and, according to the company, won’t have an effect on cash flow or business operations.

Contract customers are twice as valuable as prepaid

The earnings report wasn’t all bad news, however. T-Mobile points out that its $4 billion 4G network “challenger strategy” is well underway, with HSPA+ on 1900MHz PCS spectrum rolling out to several cities and its 2013 launch of LTE still on track. Hopefully, the network improvements and new unlimited data plan will be able to stem the losses of contract customers, who each bring in roughly twice as much revenue as their prepaid counterparts.

The Verge
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