T-Mobile USA Hurt by Lack of iPhone

Deutsche Telekom AG struggled to turnaround its ailing U.S. business in the third quarter, and Chief Executive Rene Obermann in part blamed T-Mobile USA’s lack of Apple Inc.’s iPhone for its difficulty in keeping contract customers.

The U.S. used to be a cash cow for Deutsche Telekom, but it has struggled there since 2008 and has been forced to invest more to keep existing customers and attract new ones. In the third quarter it cost $87 to keep an existing subscriber, up sharply from $58 a year earlier. On average it paid out $134 to acquire a new customer, up from $116.

Even so, its success was limited; it gained 137,000 customers in the September quarter driven by growth in the prepaid business, bringing its U.S. subscriber base to 33.8 million, but the number of more valuable contract customers fell by 60,000 to 26.7 million.

Mr. Obermann was clear on the reason why. “Consumers like T-Mobile but they also want to have the iPhone,” which T-Mobile USA has no chance of getting in the short term, he said.

AT&T Inc. is iPhone’s exclusive U.S. carrier right now, with so-far unconfirmed reports that rival Verizon Wireless–the joint venture between Verizon Communications Inc. and Vodafone Group PLC–could also be in line to get the device, potentially putting more pressure on T-Mobile USA.

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