T-Mobile is feeling the heat from an increasingly competitive U.S. cellular market, as the company reported a net loss of 77,000 subscribers during the third quarter.
The fourth-largest U.S. carrier had 33.4 million subscribers at the end of the quarter, a dip from the 33.5 million customers it had at the same time last year. T-Mobile gained new prepaid customers for the period, but it lost 140,000 contract customers, a group that generally provides more average revenue per user. The rate at which customers cancelled service, known as the churn rate, rose to 3.4% from 3% for the same time last year.
Many of T-Mobile's lost subscribers likely went to rivals AT&T or Verizon Wireless for cellular service. Thanks to the popularity of Apple's iPhone, AT&T added 2 million new subscribers last quarter, and Verizon added 1.1 million new customers for the same period. Sprint is also struggling, as it lost 545,000 subscribers during the same period.
Mobile data was a bright spot for the quarter, as T-Mobile reported $1 billion in data service revenue for the quarter, an 18% year-over-year increase. The company has lagged behind its competitors with high-speed mobile data, but it is aggressively rolling out its 3G network.
"We've made tremendous progress with our nationwide rollout of 3G," said Robert Dotson, CEO of T-Mobile, in a statement. "Over six months we will have almost doubled our high-speed coverage with a goal of reaching 200 million customers by the end of December."
T-Mobile is targeting both ends of the market in order to help stem the losses. The company is rolling out a solid portfolio of smartphones including a 3G BlackBerry, and it is providing strong support for Android-powered devices like the Motorola Cliq, myTouch 3G, and T-Mobile G1. The carrier will be adding its own "channel" to the Android Market, and it will eventually allow its Android customers to buy applications by billing it to their monthly cellular contract.
The company also recently introduced a new set of service plans that offer no-contract options, as well as monthly payment plans for handsets. These unlimited plans undercut similar offers from AT&T and Verizon, and the service plans could also help T-Mobile attract subscribers away from prepaid providers like MetroPCS and Boost Mobile.
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