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5/10/2012
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T-Mobile USA Regains Footing

Customer defections at T-Mobile USA slowed dramatically during Q1 2012; CEO talks up the company's "challenger status."

9 Hottest Phones At Mobile World Congress
9 Hottest Phones At Mobile World Congress
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T-Mobile USA parent Deutsche Telekom announced its first quarter 2012 earnings Thursday, which show some improvements with its U.S. operations. The company's U.S. revenue was up 7.2% to $1.3 billion. T-Mobile USA still lost customers, but only 248,000 of them compared to 802,000 customers it lost in the fourth quarter of 2011, and 382,000 in the same quarter last year.

T-Mobile spent much of 2011 in limbo, awaiting a decision from the Federal Communications Commission and Department of Justice on AT&T's proposed acquisition of the fourth-largest U.S. carrier. The carrier bled customers during this stint in purgatory, who left for AT&T, Sprint, and Verizon Wireless. T-Mobile blames some of these customer defections on the fact that it doesn't sell the popular Apple iPhone. The other three major operators offer both the iPhone 4 and iPhone 4S.

Once the FCC and DoJ moved to block the acquisition in late 2011, T-Mobile USA's management moved fast to come up with a new plan heading into 2012, something that T-Mobile USA CEO Philip Humm calls its "challenger strategy."

[ When smartphone makers overstep marketing boundaries. See HTC, Nokia: I'm Too Sexy For This Smartphone. ]

Humm sees T-Mobile as an up-and-comer in the U.S. market. Though it has been somewhat idle for the last 12 months, Humm thinks it can win back customers with its diverse handset offering and less-costly service plan options. It also has a trick up its sleeve to win over iPhone customers.

The company won $3 billion in cash and about $3 billion in wireless spectrum assets as part of a break-up package from AT&T for the failed acquisition. T-Mobile is using this spectrum to bolster its current 3G network, which it will eventually transition to different spectrum.

T-Mobile USA expects to spend an additional $1.4 billion on network investments this year, totaling $4 billion. The company has a fast HSPA+ network, but has yet to launch LTE 4G. It plans to move its 3G network to the spectrum currently being used by its 2G network, and eventually launch LTE 4G on the spectrum where its 3G network is now. However, T-Mobile USA won't launch LTE until 2013 the earliest.

Once this spectrum swapperoo is complete, its network will be compatible with the same version of the iPhone 4/4S that is being sold by the other carriers. It also could help T-Mobile win an official distribution deal with Apple.

This and other tactics should help T-Mobile improve its fortunes this year.

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