6/6/2007 11:29:00 AM
Cash priority for T-Mobile
T-Mobile will tell its direct dealers and distribution partners it will limit the number of new consumer connections they can make for the remainder of the year, according to sources.
Parent company Deutsche Telekom is understood to have made delivering cash the top priority for its T-Mobile USA, Germany and UK subsidiaries for the year.
With all eyes on the company's earnings, T-Mobile will pull back from spending money on third-party commissions with dealers and distributors until the end of the year.
From 1 July, T-Mobile is expected to cut commissions, as well as tighten its credit-checking scorecard, so that only customers with immaculate credit history are approved. Distributors will be given limits on the number of consumer connections for the next six months, but T-Mobile is still in the market for business connections and upgrades.
A source close to T-Mobile said: 'They will want to maintain their base, but they want to show they are generating cash more than adding customers.' In May this year, the operator revealed it had increased its earnings for the first quarter of 2007 by 32% from the previous year to £150m. T-Mobile added 106,000 net new contract customers in the first quarter of 2007, taking it to 3.8m pay-monthly customers.
The start to the year was far less aggressive than in 2006, which saw it net 266,000 new contract customers. The company said taking on lots of customers at the beginning of the year hit costs, 'but then you get the benefit of the income for the rest of the year'.
The company now has 1.6 million customers on Flext. T-Mobile is expected to stay in the hunt for new consumer connections through its own stores, The Carphone Warehouse and Phones 4u.