In the second quarter of 2006 T-Mobile USA added 613,000 net new customers, down from 972,000 in the second quarter of 2005, and the 1.04 million net customers added in the first quarter of 2006. Postpay customers made up 83% of the second quarter customer growth, up from 70% in the first quarter of 2006, and comprised 84% of T-Mobile USA's total customer base at June 30, 2006.

"In the second quarter, we followed through on a long-term planned shift in our business aimed at investing in longer relationships with customers," said Robert Dotson, President and Chief Executive Officer, T-Mobile USA. "One of the major changes executed was a move to 2-year service agreements. While this change resulted in lower net add growth in April during the transition, by June, we finished with one of our best months of top-line sales since the holidays. Today, we are now well positioned in our drive to reduce customer churn to even lower levels while ensuring our customers continue to Get More from their T-Mobile service. Also encouraging during the quarter was the continued strong growth in our sales of converged devices. We have now surpassed the milestone of 800,000 BlackBerry users, with an increase of 51,000 in the second quarter of 2006, equivalent to 10% of the net growth in postpay customers during the quarter."

Rene Obermann, CEO of T-Mobile International and member of the Board of Management of Deutsche Telekom remarked: "T-Mobile USA has delivered quality growth for the business quarter after quarter, year after year. We remain very optimistic about the future growth opportunities for T-Mobile in the U.S. market. We are also encouraged by the U.S. team's continued success in delivering consistently strong financial metrics."

T-Mobile USA reported OIBDA of $1.21 billion in the second quarter of 2006, up from $1.10 billion in the first quarter of 2006 and up from $1.08 billion in the second quarter of 2005. T-Mobile USA's net income for the second quarter of 2006 was $233 million, down from $241 million in the first quarter of 2006 and $387 million in the second quarter of 2005. The decrease in net income, despite higher operating income, is primarily due to higher income tax expense.

T-Mobile USA service revenues, consisting of postpay, prepaid, roaming and other service revenues rose to $3.59 billion in the second quarter of 2006, up from $3.39 billion in the first quarter of 2006 and $3.04 billion in the second quarter of 2005. The increases are primarily due to growth in the number of postpay customers. Other revenues were $177 million in the second quarter of 2006, down from $198 million in the first quarter of 2006 and $269 million in the second quarter of 2005. Other revenues include Wi-Fi revenues, co-location rental income, and wholesale revenues from the usage of our network in California, Nevada, and New York by customers of Cingular Wireless LLC ("Cingular"). The sequential and year on year decrease in other revenues reflects the ongoing migration of Cingular's customers to their network following the dissolution of our network sharing venture in early 2005. This migration also contributed to the slight reduction in OIBDA margin compared to the second quarter of 2005. Total revenues, including service, equipment, and other revenues were $4.21 billion in the second quarter of 2006, up from $4.04 billion in the first quarter of 2006 and $3.61 billion in the second quarter of 2005.

Average Revenue Per User ("ARPU" as defined in note 1 to the Selected Data, below) was $52 in the second quarter of 2006, up from $51 in the first quarter of 2006 and down from $54 in the second quarter of 2005. Postpay ARPU was $55 in the second quarter of 2006, up from $54 in the first quarter of 2006 and unchanged compared to the second quarter of 2005. The sequential increase in both blended and postpay ARPU related primarily to continued data revenue growth and seasonally strong roaming revenues. The fall in blended ARPU year on year is due to a higher proportion of prepaid customers in the customer base in 2006 and the decrease in prepaid ARPU.

Data services revenue from postpay and prepaid customers continued to grow, reaching a total of $390 million in the second quarter of 2006. Data revenues, which are a component of service revenues, represented 10.9% of blended ARPU, or $5.65 per customer, in the second quarter of 2006, compared to 10.1%, or $5.12, in the first quarter of 2006 and 7.5%, or $4.03, in the second quarter of 2005. T-Mobile USA's data offering was further strengthened during the quarter with the launch of the Sidekick 3 and BlackBerry 8700g. The number of BlackBerry users rose above 800,000 by the end of the quarter, with 51,000 net new users. Continued strong growth in messaging (both SMS and MMS) helped contribute to the increase in data ARPU. The total number of SMS and MMS messages increased to 7.9 billion in the second quarter of 2006, compared to 6.9 billion in the first quarter of 2006 and 4.1 billion in the second quarter of 2005.

Postpay churn declined to 2.2% in the second quarter of 2006 compared to 2.3% in the second quarter of 2005 and rose slightly from 2.1% in the first quarter of 2006. Prepaid churn was 6.6% in the second quarter of 2006, compared to 5.8% in the first quarter of 2006 and 6.4% in the second quarter of 2005. Blended churn, including both postpay and prepaid customers, was 2.9% in the second quarter of 2006, up from 2.7% in the first quarter of 2006 and 2.8% in the second quarter of 2005. Compared to the second quarter of 2005, blended churn increased due to the higher proportion of prepaid customers in the total customer base.

The average cost of acquiring a customer, Cost Per Gross Add ("CPGA", as defined in note 3 to the Selected Data, below) was $322 in the second quarter of 2006, up from $275 in the first quarter of 2006 and $310 in the second quarter of 2005. Compared to the first quarter of 2006 the increase in CPGA is primarily due to higher advertising costs, fewer gross adds due largely to the move to two year service agreements, and the change in mix of gross adds towards postpay.

The average cash cost of serving customers, Cash Cost Per User ("CCPU", as defined in note 2 to the Selected Data, below), was $24.96 per customer per month in the second quarter of 2006, down from $25.66 in the first quarter of 2006 and $25.66 in the second quarter of 2005. The sequential decrease in CCPU compared to the first quarter of 2006 was primarily due to a fall in the average upgrade handset subsidy loss.

Capital expenditures were $593 million in the second quarter of 2006, compared with $770 million in the first quarter of 2006 and $815 million in the second quarter of 2005. As part of its ongoing commitment to network coverage and quality, T-Mobile USA added approximately 960 new cell sites in the second quarter of 2006, bringing the total number of cell sites to over 34,500.

T-Mobile USA's industry-leading commitment to customer care and customer satisfaction was further reinforced and validated during the quarter as T-Mobile achieved the top ranking in the semi-annual J.D. Power and Associates Wireless Customer Care Performance Study for the fourth consecutive reporting period and also topped the VocaLabs satisfaction study on the quality of customer service among the largest wireless phone companies. These successes build upon other recent achievements -- earlier this year, T-Mobile USA topped the J.D. Power and Associates 2006 Wireless Regional Customer Satisfaction Index Study in all six regions and the J.D. Power and Associates Wireless Customer Care Performance Study, each for the third-straight reporting period.