T-Mobile loses 205K customers but still manages to make a profit

Despite losing 205,000 net customers, T-Mobile USA still managed to scratch out a profit of $207 million during the second quarter of 2012.

Profits are down by $5 million, not a huge drop from this time last year but still worrisome for the company, especially in light of the customer exodus.

Total revenue for the nation's fourth largest cellphone company dropped by 3 percent, too - falling to $4.88 billion.

Much like Sprint Nextel, T-Mobile's struggles seem tied to contract losses as progress is made in pre-paid and wholesale. Unfortunately for these businesses, the losses are canceling out the gains.

Between a rock and a hard place

T-Mobile found itself in an awkward middle position as it can't quite compete with high-end carriers like Verizon and AT&T yet can't keep up with attractive offers coming from the industry's prepaid sector.

It lost 557,000 net contract customers, the Holy Grail of consumers as they sign long-term contracts and pay the priciest monthly bills.

While Verizon, AT&T and Spring were all able to increase revenue from monthly fees, T-Mobile saw that number slip by 9 percent.

On the bright side, the company did add 227,000 prepaid customers. This figure is more than triple the number from this time last year and was thanks to customers switching from T-Mobile's no-contract Monthly 4G program.

However, T-Mobile failed to make any ground in the smartphone sector, staying stagnate at 11.6 million. Other companies rely on smartphone sign-ups to drive up monthly fees.

Though it's trying to break into the wholesale, the German-owned company saw a staggering drop in that area from one year ago.

Ship needs to be righted

While not quite ailing, T-Mobile's customer losses may foreshadow bigger issues to come as the company is currently without a permanent captain.

CEO Philipp Humm resigned in June and while interim CEO Jim Alling has taken the reigns, T-Mobile needs some stability at the top.

T-Mobile is publically placing the blame for its loses on tighter credit standards, the phase-out of older devices and a generally weaker environment for potential new customers.

Via CNET and Washington Post