T-Mobile data revenue growth due mostly to SMS, not 3G

T-Mobile’s data revenue bumped upward in the last quarter to 18.5% of service revenue, but the increase wasn’t necessarily due to its new 3G networks. Though T-Mobile said its high-speed packet access (HSPA) capacities are proving to be successful among customers, most of its recent data growth is still coming from messaging.

In the fourth quarter, T-Mobile USA carried 57 billion text and multimedia messages, up from 49 billion in the third quarter and more than double the 24 billion it carried in fourth quarter of 2007. That led to a 31% increase in data revenue year-over-year and averaged out to $9.30 a month per subscriber, compared to $8.20 a month per subscriber a year earlier.

T-Mobile still lags its larger competitors in data growth. In the fourth quarter, Verizon Wireless reported monthly data average revenue per user (ARPU) of $13.86 or 26.8% of total revenue, Sprint reported post-paid data ARPU of $14.50 a month (which doesn’t include Boost Mobile subscribers), while AT&T’s postpaid data ARPU came in at $16.30 a month or 27.4% of postpaid revenues. While not a strict apples-to-apples comparison since T-Mobile distributes its data ARPU across both prepaid and postpaid subscribers and AT&T and Sprint do not, T-Mobile has clearly seen its data growth impeded by the lack of high-speed mobile data networks. All of the other operators have reported their data revenue mix shifting from messaging to data plans, a trend T-Mobile wasn’t able to target until last year when it launched its 3G network.

T-Mobile is still expanding its new network, which now covers 107 million people in 130 cities, and it has only had one full quarter to market 3G services and devices nationally, but T-Mobile claims it has already begun to see results. When T-Mobile reported its fourth-quarter subscriber results last month, it said 20% of the phones it sold in the quarter to contract customers were 3G converged data devices like the HTC-built G1 Android phone, putting it well on its way to building a high-value smartphone customer base.

"In Q4, we began to realize in earnest the benefits of our aggressive 3G buildout, positioning ourselves to deliver new data services," Robert Dotson, president and chief executive officer, said in a statement. "We saw many customers quickly jump on the T-Mobile 3G bandwagon.”

T-Mobile also reported it spent $3.6 billion in capital expenditures in 2008, up from $2.7 billion in 2007. The increase was largely due to the construction of its 3G network, though it also added 1100 GSM cell sites to its footprint in fourth quarter, bringing its total cell site count to 44,000.