T-Mobile CEO Says It’s One More Year of Subscriber Losses
T-Mobile USA Inc. Chief Executive Officer John Legere said the carrier has put in place the necessary pieces -- the iPhone, a faster network and a service plan that lets customers buy phones in installments -- to end subscriber losses next year.
There will be some “incremental” monthly user gains by the fourth quarter of this year and subscriber numbers “should be positive” in 2014, Legere said in an interview yesterday at the International Consumer Electronics Show in Las Vegas. “It won’t be linear, but it should be sustainable.”
T-Mobile lost 1.03 million monthly subscribers in the first three quarters of 2012 as lucrative smartphone customers switched to speedier long-term evolution, or LTE, services at Verizon Wireless and AT&T Inc. (T) The swing from losing subscribers to gaining contract customers would be a milestone for Legere, who took over as the top executive for Deutsche Telekom AG (DTE)’s U.S. mobile business in September.
“This would be a big turnaround for them,” said Jan Dawson, an analyst at London-based Ovum Ltd. “T-Mobile has really struggled to grow consistently in postpaid the last several years, so that would be major progress.”
Halting customer erosion would be a surprise to some analysts. Guy Peddy, an analyst at Macquarie Bank Ltd. in London, predicts T-Mobile will lose 1.6 million monthly subscribers this year and another 400,000 in 2014.
T-Mobile has been building its own LTE network, which it expects to cover an area reaching 100 million people by mid- year. T-Mobile is also merging with MetroPCS Communications Inc. (PCS) in a pending deal that would give Deutsche Telekom 74 percent of the combined business in exchange for a $1.5 billion payment to MetroPCS shareholders. The companies are targeting a completion of the transaction in the first half of the year.
Getting to subscriber growth is a top priority, Legere said. Last month, Deutsche Telekom announced that it had made a deal with Apple Inc. to have T-Mobile sell the iPhone, making it the last of the major U.S. carriers to get the device.
Selling the iPhone, through a flexible, interest-free financing agreement, where customers can pay upfront or in installments, is how Legere describes T-Mobile’s “value plan” approach. Customer defections, or churn, will slow down with the addition of the iPhone, he said.
“The iPhone and the value plan is a big part of this,” Legere said. “We need churn to come down, and without an iconic device, that would be hard to do.”
Deutsche Telekom gained 0.4 percent to 9.17 euros at 4:06 p.m. in Frankfurt. The shares slid 3 percent in 2012.