Telecom Lead America: T-Mobile is in the middle of a
company-wide restructuring including a new postpaid strategy, new leadership
and a network modernization project, which will not have time to positively
influence the company’s results in 2H12. This operator continued to struggle to
retain postpaid subscribers, resulting in a 3.3 percent year-to-year decline in
revenue in 2Q12 driven by 205,000 net subscriber losses. T-Mobile’s future
depends on the operator’s 2013 network upgrades and the prepaid segment, which
continues to provide subscriber gains and revenue growth.
Postpaid subscriber losses accumulated in 2Q12, totaling
462,000, driven by fewer handset launches, the lack of the iPhone, and an LTE
network. There is no end in sight as T-Mobile will continue to lose subscribers
in 2H12 due to the upcoming iPhone launch that the operator will miss out on.
T-Mobile will await the completion of its network upgrades in 2014 to assist in
a revival of the company’s revenue growth.
T-Mobile’s network modernization will allow the operator
to remain competitive with all other Tier 1 operators in 2013.
The 1Q13 deployment of LTE and refarm of the operator’s
GSM spectrum will provide sufficient network improvements that will help retain
subscribers and slow revenue loss. Just like the rest of the industry,
T-Mobile’s subscribers use higher amounts of data on the higher network speeds
compared to the slower options. In June, T-Mobile reported users on the HSPA+
42Mbps network consumed 1.3GB of data each month, compared to only 760MB of
data for the average smartphone user on T-Mobile’s network. This shows there is
a significant opportunity for T-Mobile to grow its data revenue using its
existing subscriber base.
Therefore, the introduction of LTE services will help
boost average data consumption and data revenue growth for the operator. This
will not result in significant subscriber gains due to T-Mobile’s current
position lagging behind the competition in terms of LTE. Instead, T-Mobile will
use these upgrades to retain the company’s existing subscriber base and increase
data consumption to drive revenue growth. The 1900MHz refarm will allow
for future iPhone access should a deal be signed. This would boost data
consumption as iPhone users consume the highest amount of data on average.
Unlike the other Tier 1 operators, T-Mobile will use the iPhone as a defensive
strategy to help retain subscribers already on its network, as other
subscribers on other networks already have access to the iPhone without needing
to switch carriers.
Eric Costa, Research Analyst in TBR’s Networking and