Ina Fried

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T-Mobile USA Sees iPhone 4S Leading to More Customer Defections

As part of its earnings report on Wednesday, T-Mobile USA warned that it could see a rise in churn as contract customers leave for one of its iPhone-carrying competitors.

The arrival of the iPhone 4S — and its availability on Sprint — means that T-Mobile is now the only one of the four national carriers not selling Apple’s smartphone. That, T-Mobile said, could mean some rough sailing in the all-important fourth quarter, which runs through the end of December.

For the third quarter, T-Mobile saw a slight dip in revenue, but operating income before charges was up from a year ago. The carrier, which is owned by Germany’s Deutsche Telekom, saw third-quarter service revenue of $4.67 billion — up 1 percent from the prior quarter, but slightly down from $4.71 billion taken in during the year-ago quarter. Operating income, excluding various items, was $1.45 billion, up from $1.32 billion reported in the third quarter of 2010.

The company said it added 126,000 customers, down slightly from the 137,000 it added in the same quarter a year ago.

“Earnings improved as we continued to focus on making smartphones affordable to all Americans through our unlimited Value plans, improvements to our 4G network, and an expanding portfolio of 4G devices,” T-Mobile USA CEO Philipp Humm said in a statement. “Discipline on the cost side contributed to year-on- year margin improvement, while postpay churn, in particular related to the iPhone 4S launches by competitors, will continue to be an area of concern.”

The biggest issue for T-Mobile USA, of course, remains its pending sale to AT&T. The U.S. Justice Department — as well as rivals Sprint and C Spire Wireless — seeks to block the deal. T-Mobile said it remains committed to the transaction, which it hopes to close in the first half of next year.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work