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T-Mobile USA Reports Preliminary First Quarter 2013 Customer Results

T-Mobile USA, Inc. (“T-Mobile”) today provided a preliminary view of key customer results for the first quarter of 2013, demonstrating continued positive momentum and the building of a solid foundation for growth. The Company generated positive branded net customer additions, a significant improvement in branded postpaid net customer losses and continued improvement in churn performance in the quarter. The business returned to branded customer growth in the first quarter, ahead of the March 26 Un-carrier launch which includes a radically simple unlimited plan; no annual service contracts; unbundling the cost of the plan and device with lowest up-front costs; introduction of iPhone 5; and launch of LTE in seven metropolitan areas. T-Mobile will release full first quarter 2013 results on May 8, 2013.

Preliminary Key Customer and Churn Performance Results

Total net customer additions for the first quarter of 2013 were 579,000, with total branded customer growth of 3,000 customers. This is a significant improvement from a net loss of 349,000 branded customers in the fourth quarter of 2012.

“These results display positive momentum and the first positive branded growth in four years,” said John Legere, President & CEO of T-Mobile USA. “We have made material progress in stabilizing our branded business in Q1, which provides a solid foundation to build on with the new Un-carrier customer offers we launched last week across America. I believe the best is yet to come!”

In the first quarter, T-Mobile reported meaningful improvement in its branded postpaid segment. Branded postpaid net losses were 199,000 for the first quarter of 2013, compared to net losses of 515,000 for the fourth quarter of 2012 and 510,000 for the first quarter of 2012. Sequentially, customer deactivations were significantly lower with branded postpaid churn at 1.90%, a 60 basis point improvement from the fourth quarter of 2012 and the best branded postpaid churn results since the second quarter of 2008.

“Our customer experience improvement initiatives and the increase of higher credit quality customers coming over to T-Mobile are resulting in more people choosing to stay with T-Mobile, leading to a substantial increase in the retention of our most valuable postpaid customers,” continued Legere.

Branded prepaid net customer gains were 202,000 for the first quarter of 2013, an improvement from 166,000 in the fourth quarter of 2012.

Wholesale net customer additions increased to 576,000 in the first quarter of 2013 compared to 410,000 in the fourth quarter of 2012. This improvement was primarily attributable to the continued focus on growing the MVNO customer base.

Preliminary Customer Results and Churn Metrics

    Quarter Ended    
(thousands) Mar 31, 2013     Dec 31, 2012     Mar 31, 2012

Y-o-Y % Change

Customers, end of period 1
Branded postpaid customers 20,094 20,293 21,857 (8 %)
Branded prepaid customers 6,028   5,826   5,068   19 %
Total branded customers 26,122   26,119   26,925   (3 %)
M2M customers 3,290 3,090 2,691 22 %
MVNO customers 4,556   4,180   3,756   21 %
Total wholesale customers 7,846   7,270   6,448   22 %
Total T-Mobile USA customers, end of period 33,968   33,389   33,373   2 %
 
Net customer additions/(losses)
Branded postpaid customers (199 ) (515 ) (510 ) 61 %
Branded prepaid customers 202   166   249   (19 %)
Total branded customers 3   (349 ) (262 ) 101 %
M2M customers 200 135 262 (24 %)
MVNO customers 376   275   187   101 %
Total wholesale customers 576   410   449   28 %
Total T-Mobile USA net customer additions/(losses) 579   61   187   210 %
 
Note: Certain customer numbers may not add due to rounding.
                         
Quarter Ended
Mar 31, 2013 Dec 31, 2012 Mar 31, 2012

Y-o-Y bps Change

Blended churn2 3.30 % 3.70 % 3.30 % 0 bps
Branded churn2 3.10 % 3.50 % 3.20 % -10 bps
Branded postpaid churn2 1.90 % 2.50 % 2.50 % -60 bps

Branded prepaid churn2

    7.00 %     7.00 %     6.40 %     +60 bps
 

Bold “Un-carrier” Moves

On March 26, 2013, T-Mobile announced a series of moves to address consumer frustration with the unnecessary cost and complexity of wireless – another important development in its growth strategy. The moves include radically simplifying its lineup of consumer rate plans to one incredibly affordable plan for unlimited talk, text and Web; ensuring that customers never have to sign an annual service contract with T-Mobile; and enabling customers to get the most popular smartphones whenever they want for the lowest upfront cost. T-Mobile also debuted its blazing fast 4G LTE network service in seven major metropolitan areas, including Baltimore; Houston; Kansas City; Las Vegas; Phoenix; San Jose, CA; and Washington, D.C.

About T-Mobile USA

Based in Bellevue, Wash., T-Mobile USA, Inc. is the U.S. wireless operation of Deutsche Telekom AG (OTCQX: DTEGY). By the end of the first quarter of 2013, approximately 34 million mobile customers were served by T-Mobile USA — all via a common technology platform based on GSM, UMTS, HSPA+ 21/HSPA+ 42, and LTE.

For more information, please visit http://www.T-Mobile.com. T-Mobile is a federally registered trademark of Deutsche Telekom AG. For further information on Deutsche Telekom, please visit www.telekom.com/investor-relations.

Definitions of Terms

Since all companies do not calculate these figures in the same manner, the information contained in this press release may not be comparable to similarly titled measures reported by other companies.

  1. A customer is defined as a SIM card with a unique T-Mobile USA mobile identity number which generates revenue. Branded postpaid customers include customers that are qualified to pay after incurring a month of service whether on a contract or not, and branded prepaid customers include customers who generally pay in advance. Wholesale customers include Machine-to-Machine (“M2M”) and Mobile Virtual Network Operator (“MVNO”) customers that operate on the T-Mobile network, but are managed by wholesale partners.
  2. Churn is defined as the number of customers whose service was discontinued, expressed as a monthly percentage of the average number of customers during the specified period rounded to the nearest tenth of a percentage point. We believe that churn, which is a measure of customer retention and loyalty, provides relevant and useful information and is used by our management to evaluate the operating performance of our business.

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