T-Mobile Adds Customers as Battle Over AT&T Merger Continues

T-Mobile managed to add U.S. customers during the last quarter, the first time it has done so in a year. "A decline of 186,000 contract customers in the third quarter was offset by an increase in prepay customers of 312,000," T-Mobile's parent company, Deutsche Telekom said during an earnings report today. The company seemed pleasantly surprised by the development, saying its U.S. subsidiary had "reported somewhat more positive development than in past quarters." Deutsche Telekom said the average revenue per customer is approximately $14, a 13 percent increase from last year. Despite being the only major U.S. carrier to not offer the iPhone, T-Mobile also increased its number of smartphone customers by 40 percent to 10.1 million. "The improvement in earnings was largely attributable to successful savings initiatives and new rate plans without subsidized handsets," Deutsche Telekom said. Will the development affect AT&T's effort to purchase T-Mobile here in the states? In defending the merger against a recent Department of Justice lawsuit, one of AT&T's main selling points was that T-Mobile is floundering and can only be saved by a company like AT&T. Rivals like Sprint cannot "explain how T-Mobile, the only major carrier to have actually lost subscribers in a robustly growing market, provides a unique competitive constraint on AT&T," AT&T said in a September response to the DOJ. "For the past two years, T-Mobile has been losing customers despite growing demand, and, without the spectrum to deploy a 4G LTE network such as that deployed by the other carriers, there is no reason to expect a change in its undifferentiated competitive significance," AT&T continued. The major debate regarding the AT&T and T-Mobile merger in recent days, meanwhile, has been whether or not it will create or kill jobs. On Tuesday, the Communications Workers of America put out a report that said the merger would create thousands of jobs, but as DSL Reports noted this summer, the CWA stands to add about 20,000 dues-paying members if the deal goes through; (the publication also published a Tuesday takedown of the CWA numbers). In defending the merger, AT&T has referenced a May study from the Economic Policy Institute (EPI) that suggested AT&T could create between 55,000 and 96,000 jobs over the next seven years if it acquires T-Mobile. But that would only happen if AT&T follows through on a promise to invest $8 billion in its infrastructure during the same time period. David Neumark, director of the Center for Economics and Public Policy at the University of California at Irvine, however, said in an August report that "AT&T has actually told investors and the federal government that the merger would lead to reduced capital expenditures on net. If you take EPI's own logic and apply that net reduction in capital expenditures to the data, you predict fewer jobs, not more jobs." The trial in the DOJ case, meanwhile, kicks off in February. Recently, the judge overseeing the case ruled that portions of lawsuits filed by Sprint and C Spire against the merger can proceed.