T-Mobile USA racks up prepaying subscribers

Feb 25, 2010 By PETER SVENSSON , AP Technology Writer

(AP) -- T-Mobile USA, the fourth-largest U.S. wireless carrier, said Thursday it gained 371,000 new customers in the fourth quarter, reversing subscriber losses in the third quarter.

But the new subscribers were mainly low-paying ones who don't sign contracts, and T-Mobile USA's earnings and revenue fell from the same period a year earlier.

T-Mobile USA, which is owned by Germany's Deutsche Telekom AG, ended the year with 33.8 million customers, up 1 million from a year ago. That means T-Mobile isn't growing as quickly as , which had 91.2 million subscribers at the end of the year, or AT&T Inc., which had 85.1 million. Sprint Nextel Corp., in third place with 48.1 million, has been losing customers.

T-Mobile USA has been building a faster data network in hopes of competing for higher-paying buyers of "smart" phones. The trends point against it, however: T-Mobile lost 117,000 net contract customers in the quarter, while adding a net 488,000 prepaying customers, who don't often have smart phones or data plans.

T-Mobile's net income was $306 million, down from $483 million in the fourth quarter of 2008.

Revenue was $5.41 billion, down from $5.72 billion in the fourth quarter of 2008. The main reason for the revenue decline was continuing price cuts: T-Mobile USA customers paid an average of $47 per month, down from $50 per month a year earlier.

Prices for voice and text-messaging services have been declining across the industry as competition intensifies. AT&T and Verizon Wireless are compensating by selling more data plans.

The Wall Street Journal reported three weeks ago that is considering an initial public offering for USA, to help fund the network buildout. The company hasn't commented on the report.

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