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T-Mobile USA gains net subscribers in 3rd quarter

A sign for a T-Mobile store is displayed, Wednesday, Nov. 9, 2011, in New York. T-Mobile is a subsidiary of Deutsche Telekom. New plans at T-Mobile USA helped the struggling No. 4 carrier stabilize its business in the third quarter after dismal results earlier this year. A sign for a T-Mobile store is displayed, Wednesday, Nov. 9, 2011, in New York. T-Mobile is a subsidiary of Deutsche Telekom. New plans at T-Mobile USA helped the struggling No. 4 carrier stabilize its business in the third quarter after dismal results earlier this year. (AP Photo/Mark Lennihan)
By Peter Svensson
AP Technology Writer / November 10, 2011

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NEW YORK—New plans at T-Mobile USA helped the struggling No. 4 carrier stabilize its business in the third quarter after dismal results earlier this year.

The improvement comes as AT&T Inc.'s deal to buy T-Mobile from its German parent Deutsche Telekom AG has hit a roadblock in Washington. The Justice Department sued to stop the deal in August, saying it will reduce competition in the industry.

T-Mobile USA on Thursday said it gained a net 126,000 subscribers in the July to September period after three quarters of losses. It still lost contract subscribers, who are the most lucrative, but at a slower rate. The company credited its "Value" plans, which give subscribers the option to pay lower monthly fees if they bring their own phones or pay full price for new phones.

T-Mobile USA gained non-contract subscribers under its own brand for the first time in more than a year, helped by plans that provide access to faster "4G" data service.

The plans that are helping T-Mobile USA set it apart somewhat from the competition, providing an illustration of what the Justice Department fears might go missing if T-Mobile USA is bought up by No. 2 AT&T for $39 billion.

But the results also illustrate why Deutsche Telekom is eager to sell, and refusing to invest in the business: T-Mobile USA is at best treading water. Revenue is declining slowly with the flight of contract customers, while profits are stable, thanks to cost-cutting and innovative plans.

In the quarter, T-Mobile USA's net income was $332 million, up 4 percent from a year ago. Revenue fell 2 percent to $5.3 billion.