T-Mobile USA First-Quarter Customer Loyalty Rises on IPhone Plan
T-Mobile’s plan to start selling Apple Inc.’s smartphone April 12 helped slow the defection rate of contract customers to 1.9 percent a month from 2.5 percent in the fourth quarter. according to preliminary results released today. The lower churn, or customer exodus rate, also slowed contract customer losses for the T-Mobile brand in the quarter to 199,000, down from 515,000 in the fourth quarter.
The improved subscriber performance may validate T-Mobile’s strategy to offer cheaper service plans and upgrades to faster long-term evolution, or LTE, networks to deliver videos and stream music to smartphone customers. Deutsche Telekom also needs a stronger T-Mobile to help convince MetroPCS Communications Inc. (PCS) shareholders to vote April 12 for a proposed merger with its U.S. unit.
Deutsche Telekom would loan $15 billion and take a 74 percent stake in the combined company with MetroPCS shareholders getting $1.5 billion in cash and a 26 percent stake. Opponents, including MetroPCS shareholder Paulson & Co., have said the deal would load too much debt on the new company. Two of three shareholder advisory firms have urged a no vote.
T-Mobile announced new plans March 26 that offer unlimited calls and 500 megabytes of data for $50 a month. Customers can buy the iPhone 5 and other smartphones for $99.99 down, plus monthly payments of $20, a divergence from the traditional model of combining device and service payments into one.
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