--T-Mobile USA reports improvement in first-quarter customer
losses
--Shows reduction in contract customers cancelling service
--Data comes as vote on MetroPCS deal comes next week
Deutsche Telekom AG's (DTEGY, DTE.XE) T-Mobile USA reported
improvements in contract customer losses in the first quarter and
reduced the number of such subscribers canceling service, according
to preliminary figures from the company.
The results come as the company's agreed takeover of MetroPCS
Communications Inc. (PCS) has been thrown into doubt by dissident
shareholders and two major proxy adviser firms recommending against
the combination, raising hopes on Wall Street for a sweeter
deal.
Last year, T-Mobile USA lost more than two million contract
subscribers, while rival Verizon Wireless added more than five
million such customers. Verizon Wireless is a joint venture of
Verizon Communications Inc. (VZ) and Vodafone Group Plc (VOD,
VOD.LN).
In the first quarter, T-Mobile USA had a net loss of 199,000
contract customers, compared to net losses of 515,000 for the
previous quarter and 510,000 for the first quarter of 2012.
On Wednesday, the company also said the percentage of customers
canceling their contracts, known as churn, dropped to 1.9% in the
quarter from 2.5% in the previous quarter. It said the churn rate
was the lowest since the second quarter of 2008.
Wall Street analysts agreed that the results were much stronger
than expected but had a mixed reading on the overall importance of
the data.
Several analysts warned that the numbers were likely helped by
customers waiting for Apple Inc.'s (AAPL) iPhone to launch at the
carrier, which will happen next week.
Nomura Securities analyst Michael McCormack notes that wireless
competition in the quarter was likely slow and may have also
tempered any customer movement. He believes "it will be difficult
for T-Mobile to show postpaid subscriber growth in a maturing
industry."
Pay-as-you-go wireless carrier MetroPCS agreed last year to
merge with T-Mobile USA, creating a publicly traded company of
which Deutsche Telekom would own 74%. The shareholder vote is set
for next week.
T-Mobile recently began a network overhaul and announced service
plans along with the iPhone launch as part of its strategy to turn
itself around.
So far, two major MetroPCS shareholders have been vocal about
opposing the deal--P. Schoenfeld Asset Management and Paulson &
Co.--arguing for better terms or remaining independent.
The two funds own more than 12% of MetroPCS shares and contend
the resulting combination will leave investors with stock in an
under-capitalized company, they say, and a high interest rate on
excessive debt in a competitive industry.
P. Schoenfeld Asset Management held a conference call for
investors Thursday, reiterating its arguments against the deal and
pushing for better terms for MetroPCS investors. The first-quarter
performance figures weren't addressed although officials from the
fund contended that MetroPCS has outperformed T-Mobile in recent
years.
T-Mobile has defended the terms of the deal and contended that
the transaction will succeed in getting shareholder approval.
Write to Thomas Gryta at thomas.gryta@dowjones.com
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