T-Mobile Sees Slight iPhone Effect in Germany

| About: Deutsche Telekom (DTEGY)

On February 28, T-Mobile USA reported its Q4 and full year 2007 results. Earlier coverage is available here and here.

Operating Income Before Depreciation and Amortization [OIBDA] in Q4 was $1.33 billion, up 13.2% y-o-y, and down 5.6% q-o-q, with the sequential decline caused by higher customer acquisition costs. Total revenues, including service, equipment, and other revenues, went up 2.6% y-o-y and 12.2% q-o-q to $5.07 billion. Net income was $383 million, down from $526 million last year, and up from $179 million last quarter. ARPU declined from $53 last quarter to $52 in Q4.

Contract customer churn reduced to 1.8% in the quarter, from 2% last quarter, and 2.1% last year. This led to the service revenue increasing by 14.7% y-o-y and 1% q-o-q to $4.37 billion. In the quarter, net additions increased to 951,000, up from 857,000 in Q3 2007 and 901,000 in Q4 2006, taking its customer count to 28.7 million. For full year 2007, net additions were more than 3.6 million, up from 3.4 million in 2006 driven by the popularity of its service MyFaves. With increased competition in the industry, T-Mobile recently announced an all-inclusive $99.99-a-month calling plan. It has also introduced the HotSpot@Home service which allows unlimited nationwide Wi-Fi calls.

In 2007, T-Mobile USA launched several converged devices such as the T-Mobile Shadow, the T-Mobile Sidekick iD, LX, and Slide, T-Mobile Wing, and the BlackBerry Curve.

T-Mobile International is the exclusive carrier for the iPhone in Germany and Austria. In Germany, it has sold 70,000 phones - either locked or with contracts. In November following Vodafone’s (NASDAQ:VOD) legal notice, T-Mobile was forced to sell unlocked phones for $1500 or 999 euros, almost three times the normal price. Because of the iPhones, its data usage has also increased. The average internet usage by an iPhone customer is over 100MB, which is more than 30 times the normal usage.

Its parent company Deutsche Telekom (NYSE: DT) recently reported a $1.14 billion loss due to additional costs incurred on job cutting. It aims to cut 32,000 jobs by this year, and save 4.7 billion euros annually. It is currently trading around $18, and its market cap is around $79 billion. It hit a 52-week high of $23.05 on January 10.

click to enlarge