T-Mobile USA Reports Strong Third Quarter 2006 Results.BELLEVUE, Wash. -- T-Mobile USA (NYSE NYSE See: New York Stock Exchange :DT): * 802,000 total net new customers. 773,000 net new postpay customers, up from 507,000 in the second quarter of 2006 and 716,000 in the third quarter of 2005 * Strong postpay ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. of $56, up from $55 in the second quarter of 2006 and the third quarter of 2005 * 1.4 million postpay converged device A converged device combines the functions of others. Examples
* T-Mobile USA more than doubles spectrum in top 100 markets as a result of the high bids achieved in the Advanced Wireless Services Advanced Wireless Services, also known as AWS-1, is a wireless telecommunications technology, used for mobile data services, video, and messaging. AWS-1 is used in the United States and replaces the spectrum formerly allocated to Multipoint Multichannel Distribution Service, (AWS AWS Amazon Web Services AWS American Welding Society AWS Advanced Warning System AWS Advanced Wireless Services AWS Automatic Weather Station AWS Alien Workshop (skateboard company) AWS Austria Wirtschaftsservice GmbH ) Auction * $3.7 billion in service revenues in the third quarter of 2006, up 18% from the third quarter of 2005 * $1.23 billion in Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. Before Depreciation and Amortization (OIBDA OIBDA Operating Income Before Depreciation & Amortization ) in the quarter In the third quarter of 2006 T-Mobile USA, Inc (T-Mobile USA) added 802,000 net new customers, up from 613,000 net new customers added in the second quarter of 2006 and down from 1.06 million in the third quarter of 2005. Postpay customer additions were strong making up 96% of third quarter customer growth, up from 83% in the second quarter of 2006. Postpay customers comprised 85% of T-Mobile USA's total customer base at September 30, 2006. Furthermore, the introduction of two-year contracts during the second quarter continued to prove popular with customers, with close to 80% of new postpay customers opting for two-year contract terms in the third quarter. Postpay churn declined to 2.3% in the third quarter of 2006 from 2.4% in the third quarter of 2005 and rose slightly from 2.2% in the second quarter of 2006 in line with prior year trends. Prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. churn was
6.9% in the third quarter of 2006, up from the 6.6% in the second
quarter of 2006 and the third quarter of 2005. Blended churn, including
both postpay and prepaid customers, was 3.0% in the third quarter of
2006, up from 2.9% in the second quarter of 2006 and the third quarter
of 2005. The increase in blended churn compared to the third quarter of
2005 was due to the higher proportion of prepaid customers in the total
customer base."We've made several transformational moves this year that significantly increase our strength in the marketplace," said Robert Dotson, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , T-Mobile USA. "In October, we unveiled a bold new brand position in 'Stick Together.' We also launched an exciting new customer experience in 'myFaves' that introduces a breakthrough people-centered user interface across the majority of our handset lineup. We capped things off with a very successful outcome in the 2006 AWS auction, more than doubling our spectrum holdings in the top 100 markets at favorable prices compared to previous spectrum auctions. And through it all, we've continued to deliver steady and profitable growth." Rene Obermann, CEO of T-Mobile International and member of the Board of Management of Deutsche Telekom Deutsche Telekom AG (ISIN: DE0005557508, FWB: DTE, NYSE: DT, LSE: DEU, TYO: 9496 ) (abbreviated DTAG) is a telecommunications company headquartered in Bonn, Germany. It is the largest telecommunications company in Germany and in the EU. AG remarked: "T-Mobile USA continues to be Deutsche Telekom's key growth driver. The additional investments we've made in the AWS auction were essential to continue the profitable growth of T-Mobile USA for years to come. Also, we're importing T-Mobile USA's service models into our European operations because of their outstanding customer service, as recognized by numerous awards." T-Mobile USA reported OIBDA of $1.23 billion in the third quarter of 2006, up from $1.21 billion in the second quarter of 2006 and $1.17 billion in the third quarter of 2005. The growth in OIBDA occurred despite higher total customer acquisition costs related to the strong postpay growth and the expected continued decrease in Cingular Wireless LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("Cingular") wholesale revenues. T-Mobile USA's net income for the third quarter of 2006 was $1.79 billion, up from $233 million in the second quarter of 2006 and $458 million in the third quarter of 2005. The increase in net income is primarily due to the realization of a $1.5 billion non-cash income tax benefit. In the third quarter of 2006 T-Mobile USA determined, based on the weight of available evidence, that it was more likely than not that most of its deferred tax assets would be realized. Accordingly $1.5 billion of the total remaining valuation allowance of $1.8 billion was released during the quarter. T-Mobile USA service revenues, consisting of postpay, prepaid, roaming and other service revenues rose to $3.72 billion in the third quarter of 2006, up from $3.59 billion in the second quarter of 2006 and $3.15 billion in the third quarter of 2005. The increases are primarily due to growth in the number of customers, supported by strong postpay ARPU ("Average Revenue Per User" as defined in note 1 to the Selected Data, below) performance. Other revenues were $147 million in the third quarter of 2006, down from $177 million in the second quarter of 2006 and $235 million in the third quarter of 2005. Other revenues include Wi-Fi revenues, co-location rental income Noun 1. rental income - income received from rental properties income - the financial gain (earned or unearned) accruing over a given period of time , and wholesale revenues from the usage of our network in California, Nevada, and New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of by customers of Cingular. The sequential and year on year decrease in other revenues reflects the ongoing migration of Cingular's customers to its network following the dissolution of our network sharing venture in early 2005. Total revenues, including service, equipment, and other revenues were $4.37 billion in the third quarter of 2006, up from $4.21 billion in the second quarter of 2006 and $3.80 billion in the third quarter of 2005. ARPU was $52 in the third quarter of 2006, unchanged from the second quarter of 2006 and down from $53 in the third quarter of 2005. Postpay ARPU was $56 in the third quarter of 2006, up from $55 in the second quarter of 2006 and the third quarter of 2005. The sequential increase in postpay ARPU related primarily to continued data revenue growth. The fall in blended ARPU year on year is primarily due to the higher proportion of prepaid customers in the customer base in 2006. Data services revenue (which excludes Wi-Fi revenues) from postpay and prepaid customers continued to grow, reaching a total of $421 million in the third quarter of 2006. Data revenues, which are a component of service revenues, represented 11.3% of blended ARPU, or $5.91 per customer, in the third quarter of 2006, compared to 10.9%, or $5.65, in the second quarter of 2006 and 8.3% or $4.39, in the third quarter of 2005. T-Mobile USA's data device offering was further strengthened during the quarter with the successful launch of the Sidekick 3 in July and BlackBerry Pearl in September. The number of postpay converged device users (both BlackBerry and Sidekick) rose to almost 1.4 million by the end of the quarter, a net increase of 172,000 users in the quarter. Strong growth in messaging continued to contribute to the increase in data ARPU. The total number of SMS (1) (Storage Management System) Software used to routinely back up and archive files. See HSM. (2) (Systems Management Server) Systems management software from Microsoft that runs on Windows NT Server. and MMS (Multimedia Messaging Service) An enhanced transmission service that enables graphics, video clips and sound files to be transmitted via cellphones. Developed as part of the 3GPP project, MMS phones are generally backward compatible with SMS and EMS. messages increased to 9.9 billion in the third quarter of 2006, compared to 7.9 billion in the second quarter of 2006 and 4.6 billion in the third quarter of 2005. The average cost of acquiring a customer, Cost Per Gross Add ("CPGA (Ceramic PGA) See PGA. CPGA - Ceramic Pin Grid Array ", as defined in note 3 to the Selected Data, below) was $299 in the third quarter of 2006, down from $322 in the second quarter of 2006 and up from $271 in the third quarter of 2005. Compared to the second quarter of 2006 the fall in CPGA is primarily due to lower advertising costs and higher gross customer additions. The average cash cost of serving customers, Cash Cost Per User ("CCPU CCPU Continuous Computing Corporation (stock symbol) CCPU Cash Cost Per User (Sprint) CCPU China Criminal Police University CCPU Cryptographic Central Processing Unit ", as defined in note 2 to the Selected Data, below), was $24.83 per customer per month in the third quarter of 2006, similar to $24.96 in the second quarter of 2006 and $24.65 in the third quarter of 2005. The slight sequential fall in CCPU in the third quarter was primarily due to relatively lower general and administrative expenses being partially offset by relatively higher network costs. Capital expenditures were $569 million in the third quarter of 2006, compared with $593 million in the second quarter of 2006 and $585 million in the third quarter of 2005. As part of its ongoing commitment to network coverage and quality, T-Mobile USA added approximately 800 new cell sites in the third quarter of 2006, bringing the total number of cell sites to almost 35,300. For the fourth consecutive reporting period, T-Mobile USA was the only wireless carrier to rank highest in overall customer satisfaction among wireless telephone users in all of the six regions surveyed by J.D. Power and Associates. This survey result continues the successful run of winning awards - in October T-Mobile received the highest ranking in the J.D. Power and Associates Wireless Retail Sales Satisfaction Performance Study, also for the fourth consecutive reporting period. And earlier this year, J.D. Power and Associates announced that T-Mobile ranked highest in Wireless Customer Care for the fourth reporting period in a row. The third quarter saw the conclusion of the Advanced Wireless Services (AWS) auction. The auction ended with T-Mobile USA being the high bidder on 120 licenses for an aggregate value of approximately $4.18 billion. As of September 30, 2006, T-Mobile USA had paid approximately $0.6 billion in deposits for these licenses. These deposits are not included in third-quarter capital expenditures but were recorded as "Payments in advance to acquire spectrum licenses" in the consolidated statement of cash flows. Following the end of the quarter, T-Mobile USA paid the remaining $3.6 billion to the FCC (1) (Federal Communications Commission, Washington, DC, www.fcc.gov) The U.S. government agency that regulates interstate and international communications including wire, cable, radio, TV and satellite. The FCC was created under the U.S. for the licenses on which it was the high bidder. The actual license grant will occur after the FCC application review. We currently expect these licenses to be granted late in the fourth quarter of 2006 or in early 2007. This press release includes non-GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Reconciliations from the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below following Selected Data and the financial statements. T-Mobile USA is the U.S. operation of T-Mobile International AG & Co. KG ("T-Mobile International"), the mobile communications subsidiary of Deutsche Telekom AG ("Deutsche Telekom") (NYSE:DT). In order to provide comparability with the results of other U.S. wireless carriers all financial amounts are in US dollars and are based on accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ("GAAP"). T-Mobile USA results are included in the consolidated results of Deutsche Telekom, but differ from the information contained herein as Deutsche Telekom reports financial results in accordance with International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). (IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System ). [TABLE OMITTED] Since all companies do not calculate these figures in the same manner, the information contained in this press release may not be comparable to similarly titled measures reported by other companies. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] The following schedule reflects the CPGA calculation and provides a reconciliation of cost of acquiring customers used for the CPGA calculation to customer acquisition costs reported on our condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated statements of operations: [TABLE OMITTED] [TABLE OMITTED] About T-Mobile USA: Based in Bellevue, WA, T-Mobile USA, Inc. is a member of the T-Mobile International group, the mobile telecommunications subsidiary of Deutsche Telekom AG (NYSE: DT). T-Mobile USA's GSM/GPRS 1900 voice and data network in the United States reaches over 276 million people, including roaming and other agreements. In addition, T-Mobile USA operates the largest carrier-owned Wi-Fi (802.11b) wireless broadband High-speed wireless transmission of data. What is "high" speed is always a changing number. Wireless systems are typically slower than land-based, wireline networks. In the past, wireless broadband started at 250 Kbps, whereas land-based broadband was generally considered to start at T1 (WLAN See wireless LAN. WLAN - wireless local area network ) network in the United States, available in more than 8,000 public access locations including Starbucks coffeehouses, Kinko's copy shops, Borders Books and Music, Hyatt and Accor hotels, selected airports' American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the Admirals Clubs, United Red Carpet Clubs, US Airways airways Anatomy The 'pipes'–trachea, bronchi, bronchioles–through which air passes to and from the alveoli. See Small airways. Clubs and Delta Air Lines Clubs. T-Mobile's innovative wireless products and services help empower people to connect effortlessly to those who matter most. Multiple independent research studies continue to rank T-Mobile highest, in numerous regions throughout the U.S., in wireless call quality and wireless customer care. For more information, visit the company website at www.t-mobile.com. About T-Mobile International: T-Mobile International is one of the world's leading companies in mobile communications. As one of Deutsche Telekom AG's (NYSE: DT) three strategic business units, T-Mobile concentrates on the key markets in Europe and the United States. By the end of the third quarter of 2006, almost 92 million mobile customers were served by companies of the Deutsche Telekom group, all over a common technology platform based on GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. , the world's most widely used digital wireless standard. This also makes T-Mobile the only mobile communications provider with a transatlantic service. For more information about T-Mobile International, please visit www.t-mobile.net. For further information on Deutsche Telekom, please visit www.telekom.de/investor-relations. |
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