T-Mobile USA posts record subscriber losses, raising difficult questions for regulators

T-Mobile USA lost a record number of subscribers in the first three months of the year, posing a conundrum for regulators as they look at whether to let AT&T buy the smaller carrier for $39 billion.

The argument against the deal is that it would eliminate one competitor in the wireless industry. But judging by results reported May 6, T-Mobile isn't competing successfully. T-Mobile, the smallest of the four national carriers, lost a net 471,000 subscribers on contract-based plans. It was able to add subscribers through wholesalers, who pay much less than contract-signing customers, but it still lost 99,000 overall. Both figures are record losses for T-Mobile. T-Mobile’s quarterly revenue fell to the level it was at three years ago, just before it got a boost by buying a small regional carrier. In the same period, AT&T’s wireless revenue grew 29 percent (it, too, was aided by some acquisitions). It’s a demonstration of the importance of scale in an industry where growth has slowed now that almost every American has a phone. The seven largest carriers provide service to 307 million devices in a country that has 309 million people. The No. 3 and No. 4 carriers, T-Mobile and Sprint, are losing subscribers. Sprint was ailing for years while T-Mobile did relatively well. Sprint is turning around, but its results are far from matching those of AT&T and Verizon Wireless. T-Mobile started losing subscribers a year and a half ago, a trend that seems to be accelerating. That puts regulators who want to stimulate competition in a difficult position. If they block the merger to preserve competition, they risk watching T-Mobile decline into irrelevance. If regulators allow the merger, they would boost the overall health of the industry by hitching T-Mobile’s fortunes to those of AT&T’s. But consumers would have three national carriers to choose from, instead of four.