virgie watchmen: T-Mobile posts Q3 2012 earnings, prepaid doing well

T-Mobile

T-Mobile has finally posted its Q3 2012 earnings and they're looking pretty good. We'll start first with the carrier's postpaid contract earnings. On the postpaid side, T-Mobile posted total revenues of $4.9 billion, down 6.4-percent year-over-year. Contract ARPU (Average Revenue Per User) dropped slightly by 3.3-perecent to $56.59, mostly due to the move to Value Plans which make up a quarter of postpaid subscribers. T-Mobile in the end lost 492,000 postpaid customers for the quarter, which is an improvement from last quarter.

The positive side of this quarter's earnings is in prepaid. T-Mobile added 365,000 prepaid subscribers on the quarter, and prepaid revenues were up 38-percent (year-over-year) to $450 million. ARPU was also up 12.5-percent to $27.35 for prepaid customers. Wholesale customers (that's M2M and MVNO) also increased by 287,000. These are pretty big growth numbers, and you can understand why T-Mobile has started to push towards prepaid more and more.

Overall, T-mobile's net income for the quarter was a loss to the tune of $7.8 billion. That sounds bad, but let us quickly explain why they made a loss this quarter. Because of the merger between T-Mobile and MetroPCS, the carrier had to take a non-cash "impairment charge" of $8.1 billion, and chose to write it all down in one quarter. This turned a quarter that would have been a $400 million profit into one with a considerable loss. Mergers aside, expenses for the quarter were down 0.4-percent year-over-year.

When looking at the root causes behind the numbers you can hardly call this a "loss" for the quarter, all things considered. Money was well spent on a merger that will improve T-Mobile's position in the U.S. market considerably, and prepaid growth is looking positive for the future.

Source: T-Mobile Newsroom; Extended Financial Summary (PDF)