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T-Mobile loses 471,000 contract customers, cites 'competitive pressures'

By | May 6, 2011, 5:00am PDT

Summary: According to T-Mobile, “the decline in net contract customers was driven primarily by fewer contract gross customer additions and continued high contract churn due to competitive pressures.”

T-Mobile USA saw a spike in contract customer losses as it struggles to compete with other carriers.

The company said Friday that it lost 471,000 net contract customers in the first quarter compared to 318,000 in the fourth quarter and 77,000 a year ago. Overall, T-Mobile lost 99,000 customers in the quarter.

According to T-Mobile, “the decline in net contract customers was driven primarily by fewer contract gross customer additions and continued high contract churn due to competitive pressures.”

Total churn was 3.4 percent in the first quarter and contract churn was 2.4 percent, up from 2.2 percent a year ago.

There has been anecdotal evidence that T-Mobile has been working to keep customers in the fold with random check-in calls. Meanwhile, AT&T, Verizon and Sprint continue to outperform T-Mobile, which is outgunned on devices and networks.

To wit:

The unknown is whether T-Mobile can hold customers until AT&T acquires the company.

T-Mobile ended the first quarter with 33.63 million customers, down from 33.73 million in the fourth quarter and 33.71 million in the first quarter a year ago.

The company reported first quarter earnings of $135 million, down from $362 million a year ago. Revenue was $5.16 billion, down from $5.28 billion a year ago.

T-Mobile USA CEO Philipp Humm said that the company is laying the groundwork for better results, but still “has challenges facing our business.” Rene Obermann, CEO of T-Mobile parent Deutsche Telekom, said T-Mobile will compete aggressively until the AT&T deal closes.

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T-Mobile, Financial Accounting, Operational Accounting, Finance, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

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Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
kidneyy 9th Oct
@Bates_ Please let me know if you're looking for a article writer for your site. You have some really great articles and I believe I would be a good asset. If you ever want to take some of the load off, I'd really like to write some material for your blog in exchange for a link back to mine. Please send me an e-mail if interested. Cheers! kidney stones symptoms
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Guess AT&T is the golden-goose killer after all
wolf_z 6th May 2011
Seems like T-Mobile customers are *really* unhappy about AT&T buying T-mobile...
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Indeed
Pete "athynz" Athens 6th May 2011
@wolf_z I was thinking much the same thing when I read this.
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I am sure that isn't it.
Bates_ 6th May 2011
@wolf_z Give it a rest. Verizon honestly is no better then AT&T (LTE aside). Everything one does, the other follows.
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xSteven777x Updated - 9th May 2011
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ScorpioBlue Updated - 9th May 2011
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
tkejlboom 6th May 2011
@Bates_

Apparently, you haven't been paying attention. T-mob announced halfway through the quarter that they were trying to sell to AT&T. T-mob customers don't sign with T-mob because they want to be T-mob customers. They don't want to be AT&T or Verizon customers. Announcing that you're going to sell to either one means that over the course of the year it takes to close the sale you're going to lose half your customers.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Ray Burne 6th May 2011
@Bates_
YES... interesting how they follow one another... In some circles, this is known as "collusion"... of course, to keep 'em attorneys off my ass, I'll state that this is just my opinion.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Champ_Kind 6th May 2011
@xSteven777x I used to think that, then I've been having problems with T-Mobile for the last year and a half. SIM card swaps, device swaps, all that crap - same problems. Paired with the fact that they're falling behind on technology by a long shot (no LTE or WiMAX plans), I'm glad to be rid of them.
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Pot meet Kettle
Pete "athynz" Athens 7th May 2011
@xStephen777x Dude use YOUR brain and shut the hell up. This:
Att=trash
Verizon=acceptable trash
Tmobile=the only decent cell phone provider in america

is purely subjective based on one's location. In my area AT&T is the best followed by VZW, Sprint, and then T-Mobile which blows. Unlike you however I do realize that while T-Mobile's service sucks out loud here it's great somewhere else.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
sashamart Updated - 27th Sep
@Bates_ Perhaps they aren't happy about it, but the announcement by ATT landscaping houston for the acquisition of T-Mobile did not happen until March 20th, 2011; I highly doubt that T-Mobile lost customers, en masse, between March 20th and March 31st. T-Mobile, scottsdale chiropractor however, really does need to diversify their phone line up; they keep trying to change and restructure their plans, but that alone simply italian restaurants san francisco is not compelling enough to keep their existing customers or to attract customers away from other carriers.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
kidneyy 9th Oct
@Bates_ Please let me know if you're looking for a article writer for your site. You have some really great articles and I believe I would be a good asset. If you ever want to take some of the load off, I'd really like to write some material for your blog in exchange for a link back to mine. Please send me an e-mail if interested. Cheers! kidney stones symptoms
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
1019902735 6th May 2011
@wolf_z...Perhaps they aren't happy about it, but the announcement by ATT for the acquisition of T-Mobile did not happen until March 20th, 2011; I highly doubt that T-Mobile lost customers, en masse, between March 20th and March 31st. T-Mobile, however, really does need to diversify their phone line up; they keep trying to change and restructure their plans, but that alone simply is not compelling enough to keep their existing customers or to attract customers away from other carriers.
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I love Topics like this!
Bates_ 6th May 2011
@1019902735
Exactly. People need to stop blaming AT&T for every little thing wrong in the mobile network world. "T-Mobile lost customers, that HAS to be AT&T's fault. Nothing else makes sense because we don't want to bother doing research so let's just blame AT&T."

@ScorpioBlue
Thanks for the support there.

@xSteven777x
I use it quite often thank you. T-Mobile should be bottom rung in my opinion (for my area). The coverage for whatever reason is just horrible. So instead of turning into a fanboy troll, just relax and try to accept someone else's opinion. It's hard but I am sure you have the mental capacity to at least try.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures
redhaven 6th May 2011
@1019902735 Actually, this is exactly what has happened to me. I have had t-mobile for years and I have been happy but there is no way I am going to sign another contract until I see how this shakes out. My contract ends in December. They give me a partial upgrade between contracts and I usually take it and extend the contract because I like having the latest phone but not this time.

I had AT&T pre-cingular and even though it is not the same company now, I would never have that logo on my phone after they shut my phone off over a $25 disputed charge (I had paid the $150+ bill) on the day my father died and then wouldn't turn it on even when I offered to pay. No thanks. Never ever again.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
tkejlboom 6th May 2011
@1019902735

Uh, 471,000 was a little less than 2% of their 26,375,000 contracts and 10 days is a little less than 3% of a year. Actually, as the typical contract term is 2 years now, the numbers line up REALLY close.

I agree Q2 will be much more interesting, but especially small businesses making end of quarter decisions seem far less likely to re-sign. That would in turn explain why their total loss of customers is a fraction of the fraction of the loss of contracts.
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paul613 Updated - 9th May 2011
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paul613 Updated - 9th May 2011
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I believe you are correct
doodlius 6th May 2011
@wolf_z
As a very happy T-Mobile customer, I can say that I am NOT happy about the pending AT&T takeover. I just re-upped my contract, though - right before the takeover was announced. So I'll stick around and see what happens for now.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Ray Burne 6th May 2011
@doodlius
Never another contract... for me. The real issue is that even with a no-contract or out-of-contract the dangers are in the restrictions in the Terms of Use... for example, if you buy a iPhone for retail FULL price (goes for ANY smartphone), AT&T WILL force you into a minimum of $15/month even if you DO NOT want data... so, you can't use that smartphone for a PDA and WiFi-only access. Check it out - it is true. Then, AT&T will change those Terms and Conditions of Use whenever they want to... you really have no recourse... contract or not.
Where the hell is the Commerce Department and Dept. of Justice? Maybe they are being paid off - of course, all of this is just my opinion.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
JT82 10th May 2011
@Ray Burne - Dude put your tin foil hat back on, it's slipping. It is well known that any smartphone device requires a data plan, contract or not - it's EVERY carrier. If you got a giant data bill in the mail, you'd be glad you had it.

Contract do two things: lowers the cost of the phone, preserves your rate plan and terms for the period of time. Non-contract is subject to change every month. If you are on a contract and the Terms and Conditions change, you DO have every right to not accept it and terminate (without an early termination fee) under the Material Adverse Affect clause. Try reading your contract.
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Sounds like someone's never been a T-Mo customer
voyager529 10th May 2011
@JT82:

"@Ray Burne - Dude put your tin foil hat back on, it's slipping. It is well known that any smartphone device requires a data plan, contract or not - it's EVERY carrier. If you got a giant data bill in the mail, you'd be glad you had it."

I dunno how things work on Verizon or AT&T for you, but here in T-Mobile's customer-centric world...

--Any smartphone device requires a data plan FOR SUBSIDY. You can pay full price for a handset, not renew your contract, and not be forced to get a data plan. Hit up your local T-Mo store and ask them. I've done it myself, personally. Twice.

--If you don't sign up for a data plan, T-Mo simply blocks access to their data network. You don't get data access, but you don't get the bill for one, either.

--On paper, you might be accurate regarding the fact that the contract guarantees that your rate won't change. In practice, we signed up for unlimited texting on three lines for $19.99 four years ago. I still pay $19.99, despite that plan now costing $29.99.


As an added bonus, we don't pay for data overages, either. After the 5GB/2GB soft-limite, we just get throttled back down to EDGE. Slow? yes. But e-mail still flows, twitter still tweets, and my bill doesn't change.

Did I mention that the STOCK firmware for my phone includes a tethering application, and my ability to use it for tethering is covered under my service agreement for as long as I own the phone that does it?


If AT&T were to take up those terms, I wouldn't care that the name on the bill changed. Their track record, though, leads me to believe that I'll instead be laughed out of the board room for the suggestion.

Joey
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Ray Burne Updated - 6th May 2011
@wolf_z I left AT&T (and I'm a retiree with a small $19 discount) because they were asses about smartphones... Now, I'm going to leave T-Mobile if the deal goes through. I'm so annoyed with this crap that I have been experimenting with WiFi ONLY on my old iPhone and I think I can get away with VOICE ONLY in the new world order. Screw 'em all.
(Everything here is my opinion, facts remain for you to decide on your own issue.)
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
TaxNerd 11th May 2011
@wolf_z Exactly. We were on our way out to either Sprint or Verizon, but were committed to at least consider TM smart phones just to avoid the frustration of transition. Out comes: 1) the buyout announcement, and 2) free Droid Xs if we signed with Verizon (we got three lines...the 3rd DX cost $30).

We had no complaints about TM but were leery of AT&T...and no hottie in a purple dress was going to change our minds.

(Transition was frustrating due to 3rd party involvement, but overall we're satisfied with the change to date and the DX is an awesome device.)
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I'm happy
proton_z 6th May 2011
Well if you think you need all the fancy garbage and want to pay an arm and leg...go for it. I'm happy with T-Mobile and angry about a buyout. When I was with U.S.Cell they where CONSTANTLY trying to peddle me something and didn't care if I was happy or not.
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xSteven777x Updated - 8th May 2011
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Ray Burne 6th May 2011
@xSteven777x
The argument MUST go to Congress to open their eyes and stop this insanity. The wireless frequencies in the U.S. belong to the People - just like Federal Park lands. The FCC licenses the use of the spectrum for the benefit of the People and they charge a license fee... they DO NOT SELL IT OUTRIGHT. What should happen, is that if AT&T buys T-Mobile, the existing licenses should revert to the FCC to re-license at a new auction... the People are getting screwed because years ago, wireless licenses were rather cheap, now big companies are buying other companies just for the spectrum... We are getting screwed. Congress must fix the problem but they are so strung-out... well, that is another story.
(Everything in this post is my personal opinion and voiced under free speech. Check out things for yourself and make up your own mind.)
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Ray Burne Updated - 6th May 2011
@proton_z
When AT&T takes full ownership, your World will go to crap... you will be charged for data if you have anything that remotely sniffs like a smartphone... even if you just want to use that eBay iPhone/Blackberry/Android for a PDA and Voice... they will charge you... it is in the Terms of Use and not in the contract language. My recommendation is to buy KY now because when folks find out they are going to get screwed, the price for the lub will go sky high... just like crude oil.
All the above are personal opinions expressed under freedom of speech... everyone is advised to research items on their own and form their own opinions.)
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
ZogWee 6th May 2011
Wow thats kinda crazy. I have been out of contract with AT&T for a while. I paid cash for my iPhone4 so I could avoid contract. AT&T just doubled my data plan from 2 to 4 gigs (no cost) and gave be 1,000 roll over minutes. I am happy.

www.anon-toolz.at.tc
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Wow thats kinda crazy.
faulk6 6th May 2011
@ZogWee
you pay cash but, you did not mention how much.. lol
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Ray Burne 6th May 2011
@ZogWee
So, you are happy - I'm happy for you. Try this to see what kind of company AT&T really is... just for fun, call customer service and tell them you purchased your iPhones at retail and are under no contract, but you find you no longer need wireless data... tell them you want to convert your iPhone number to VOICE ONLY... yea, get ready for the answer - they own your butt and you can't break free.
(Above is my opinion, it's Free Speech. Check things out for yourself with the AT&T terms and conditions of use.)
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It's Apple making the final decision.
Bates_ 6th May 2011
@Ray Burne Apple sets the pricing on iPhones, not just AT&T. If you buy and use an iPhone you have to get the full package or nothing. That's how it was when I got my 3GS. There was one package and one price. Now there are options and plans, but when I got mine there was no option and Apple had created the plan, not AT&T.
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T-Mobile support already starting to slide
balsover 6th May 2011
I had an undesirable experience with T-Mobile Customer support 2 days ago (they changed my data plan without my permission), they had the exact same attitude that ATT had when I was with them, their only response to my displeasure was 'you could switch but that would mean that you pay a $200 early termination fee?. I pay more than $200 for T-Mobile service each month, does any idiot feel that a $200 early termination fee is going to be a deterrent?
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Ray Burne 6th May 2011
@balsover
Yes, the T-Mobile idiot does believe it... it's in the "script". It will get worst under AT&T... my opinion, of course, but I had terrible customer service under AT&T Mobility and I was an AT&T Senior manager! It don't matter.
(above is my opinion and not represented as facts outside my personal scope of experience... that is, it is Free Speech)
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I get it now!
Bates_ 6th May 2011
@Ray Burne So this is why you are so hard toward AT&T, because you used to work for them?

Ok things just became clear and I will now take all your AT&T bashing comments with a grain of salt. I feel the same way about LiveU (I used to work for them lol).
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
crz6662 6th May 2011
@balsover
Very poor on answering the phones for the last last few months. Try calling now and you'll be on hold for at least 20 minutes, every time. "Due to extreme call volume". Last customer service rep said it was because of all the new phone activations. I don't believe it. Half their work force probably quit after hearing of the AT&T buyout.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
arms@... 6th May 2011
I've been with TMO since Voicestream also and love TMO. I'm not happy about the _potential_ merger and hope it doesn't go through. TMO has the best pricing, good cust svs, and is improving slowly on phone offerings (can you say Galaxy S II, LG 2x) I don't understand why TMO is having the loss of customers.
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Well...
Bates_ 6th May 2011
@arms@... Because I believe their infrastructure is not as good as everyone thinks it is and they are slowly beginning to see that. I won't argue on the competitive pricing and all the good things that TMO offers, I have no problem with a fellow GSM network to be honest, but the fact is: This merger will go through.

A good portion of people will run for the hills (in this case the hills= Verizon) and another portion of lazy people will just cave and stay on thus making AT&T that much larger,which is what I think AT&T is hoping for. I think they are planning on, oh let's say a good 50-65% of current TMO users to just be too lazy enough to want to switch phones and carriers.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
sparhawks 6th May 2011
@Bates_ 50-65%? Try 95%.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Ray Burne 6th May 2011
@Bates_
I believe AT&T wants a significant loss in T-Mobile customers... to Verizon or Virgin or... My take on this is that AT&T is buying spectrum and they will rework the Infrastructure with the conversion of this spectrum to LTE. Of course, this is just my opinion.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
tkejlboom 6th May 2011
@arms@...

The loss of customers is quite small. The loss of contracts is pretty intense.
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Re: T-Mobile Deserves Customer Loss!
scorpio1113 6th May 2011
Competitive pressure had less to do with it than the fact that if you are one week late in paying, you begin to get tortured with one robocall after another and 18 text messages, reminding you that you are late. They specialize in customer abuse and deserve what they got!
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Canuck623 6th May 2011
@scorpio1113
My biggest reason for leaving them was the coverage. Was with them many years and never saw an improvement. I live in Arizona and paid full price for half the coverage. With Verison now and have mobile everywhere I didn't with T Mobile.
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seriously??
jokila 6th May 2011
@scorpio1113 Pay yo bills on time, don't speed while driving, don't tell white lies, don't cheat, etc. Bad or irresponsible behaviors have consequences.

I don't know if you do all of the above, but people complain about how they are wronged when it's their own damn fault!
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
Aerowind 6th May 2011
@jokila Don't know where you grew up, but white lies are a good thing. Would you seriously say to a dying man "You were a horrible human being" instead of "We'll miss you", even if it's the truth?
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Say what you all will
tsecreto 6th May 2011
At least on the east coast Sprint and the EVO is just great on all counts. The WiMax will just keep getting better especially with all of the companies behind it. I have said before my Lenovo laptop has built in WiMax and so does about 30+ other laptops at Best buy. If a mobile network delivers 5-6 MBPS consistently (WiMax, if not right now very soon) then just about anything you want to do will be there. Keep in mind not too long ago T1's (1.5/1.5) were $1,000 per month and companies ran corporate Web Sites and e-mail with them.
Sprint drops 0 calls on me and the EVO is still really fast even using the 3G.
It's very cool that I can watch video on the phone but how much is enough, that's why we have laptops and HDTV.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
rdw551 6th May 2011
And they will continue to lose costomers beacuse of the AT&T buy out. Many moved to T-Mobile to get away from AT&T. Hope they don't lose them all If the deal goes through.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
juliocdiaz@... 6th May 2011
I am happy with TMO but also I'm not happy with the potential merger. I don't like going back to ATT.
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Customer Service has changed
rle11wb@... 6th May 2011
I've been with T-Mobile for 14 years. Best of the best in every way - until after the ATT announcement. Now they've been annoying me with msgs and marketing calls. And I even -for the first time - ended up with a third-world script kiddie. Sick of it. I know ATT and Verizon are the same devil in different disguise, so I'm looking at CREDO.
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RE: T-Mobile loses 471,000 contract customers, cites 'competitive pressures'
phughes3 6th May 2011
When I left T-Mobile due to constant dropped calls, I received a punishment bill in the mail for $100.00. I didn't pay it and soon it was raised to $200.00. For six years they pursued this nasty attack and I constantly asked for some proof of a contract that I had broken and they refused. I had a ONE year contract with Powertel which became Wave Stream which became T-Mobile. That's right a ONE year contract ...and five years later I moved to Sprint. Good riddance to T-Mobile who need a boot into the grave. They are nasty like them all...but certainly the leader.
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They lose client cause a bad service
dkaparunakis@... 6th May 2011
After my bold 9000 was stolen, they replaced with the new bold... I do not know if the OS but I had a lot of dropped and sometimes not even initiated calls... Called them.. a lot of talking over the phone ... a lot of testing... meanwhile I have no communication... I offered them to replace my phone for some other... they said no... until I got tired of the crap and mover to verizon... end of story... and ny the way I was a 5 years customer...

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