(Newswires’ telecom reporter Roger Cheng penned the following.)
The fourth-largest U.S. wireless carrier by subscriber base has apparently hit a wall with growth. The first quarter is usually a rough one for the national carriers, as customers in recent years have shifted away from pricier contracts and toward less expensive prepaid services. But T-Mobile saw its growth on both ends falter, suggesting it is having trouble keeping pace at all levels of the wireless business.
In the first quarter, T-Mobile USA lost 118,000 net contract customers, consistent with recent losses, but a reversal of the 160,000 additions seen a year ago. The real concern stems from the prepaid side. It only added 41,000 customers, down 92% from the fourth quarter and 83% from a year ago. The startling drop in prepaid customers — at a time when the other prepaid providers showed impressive growth — illustrates the brutal competitive environment. With T-Mobile USA at the short end of it.
Even Sprint Nextel Corp., which can’t reverse the loss of its most lucrative contract customers, can point to the prepaid side with success. The company purchased Virgin Mobile USA to double down on the low end, and the strategy appears to be working. Verizon Wireless saw its own contract customer business declined, but has expanded its wholesale business to offset the slowdown, while AT&T Inc. has used emerging devices as another source of growth.