T-Mobile subscriber numbers surge in Britain

T-Mobile's investment in winning new customers paid off in the first quarter as it added more UK contract customers over the three-month period than it did for all of 2005.

In the UK, T-Mobile operates under its own brand and provides network capacity to other service providers including Virgin Mobile. Its UK performance was subdued in 2005 as it lost ground to rivals such as O2. T-Mobile's parent company, Deutsche Telekom, has committed to investing in growth but analysts are yet to be convinced that throwing money at the problem will achieve the desired effect.

In the UK, T-Mobile added 266,000 new contract customers in the first quarter compared with 67,000 in the same period a year earlier. Significantly, those customers signed up to 18-month contracts which locks the user into the subscription for longer than the previous standard contract of one year. It added 113,000 pre-pay users, although that figure was diminished by a recalculation of Virgin's customer base last year. It had 16.4 million UK customers at the end of the quarter.

But that growth came at a cost. Earnings were £78m lower than in the same period while its margin fell to 16 per cent from 28 per cent.

Jim Hyde, T-Mobile UK's managing director, said he expects margins to rise in the second half of the year as new customers begin to spend money. The full-year UK margin will be higher than in the previous year, he said, adding that T-Mobile took market share from all its rivals in the first quarter.