T-Mobile USA First-Quarter Customer Loyalty Rises on IPhone PlanScott Moritz
T-Mobile USA, the U.S. wireless unit of Deutsche Telekom AG, said subscriber numbers and customer loyalty improved in the first quarter as it cut prices and prepared to offer the iPhone.
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. 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.