YOU ARE AT:CarriersReport: T-Mobile US moves resonate with customers; Sprint needs to react

Report: T-Mobile US moves resonate with customers; Sprint needs to react

T-Mobile US has been on a bit of roll over the past several months, merging its operations with MetroPCS, rolling out new rate plans and during the second quarter blowing the competition out of the water in customer additions. Not bad for the country’s “smallest” nationwide operator.

Analysts have noted this surge and predict that the carrier could be set to continue showing strong results at least through the end of the year. A new report from Recon Analytics, based on a survey of T-Mobile US customers, claims that while there are some financial concerns with T-Mobile US’ latest moves, the carrier has done a great job of taking advantage of the current wireless environment.

The Recon survey found that among respondents, more than one-fourth had already signed up to T-Mobile US’ JUMP device upgrade program, which it noted was nearly equal to the number of customers that also have a device insurance plan, something that is included in the JUMP program. Recon noted that this should result in more than half of T-Mobile US’ customers being on the JUMP program, which is 16% less expensive than the traditional handset insurance plan, thus could have a financial impact on T-Mobile US down the road.

“Because the device can be traded-in for a device of the same price after six months without additional payments, one can only wonder who is paying for the value decline of the traded-in device,” Recon Analytics noted. “Similar to a new car, which loses most of its value the moment it drives off the lot, mobile phone see their value decline even faster because the replacement cycle is much more rapid. Someone has to pay for the decline in the device’s value and it’s not the consumer. It is almost inevitable that the JUMP program will need to get adjusted.”

Churn reduction

The Recon survey also touched on T-Mobile US’ improved customer churn numbers, explaining that approximately one-half of the gross additions being posted by T-Mobile US and MetroPCS pre-merger were customers going between the two carriers, both of which were targeting a similar low-end, no-contract space.

“The companies were competing against each other to a greater degree than any other carrier pair,” Recon Analytics found. “When the two carriers merged, suddenly the external churn that was counted in both carriers’ metric was internalized. Logically, the churn dropped. … The fundamentals of T-Mobile’s growth should stay intact for at least another two quarters if no competitor makes a significant change.”

T-Mobile US is looking to goose those efforts as well, having sent out invitations for an event this week where the carrier is expected to announce the next round of its “Un-Carrier” strategy, which it hinted at during the recent Competitive Carriers Association event.

RCR Wireless News spoke with Weston Henderek, principal analyst of consumer services at Current Analysis, to get his take on the future of T-Mobile US.

The carrier that looks to be most susceptible to T-Mobile US’ current onslaught is Sprint, which just recently went through a round of acquisition activity that has resulted in it gaining full control of Clearwire, while also having a controlling stake in itself acquired by Japan’s Softbank. Sprint recently unveiled new rate plans that “guarantee” customers unlimited data, voice and messaging services for their smartphone devices as well as a device upgrade plan designed to compete against JUMP.

Analysts have noted that Sprint will need to continue being aggressive in combating T-Mobile US’ moves, pointing out that both carriers are targeting the same market. Sprint is expected to make further marketing moves in the near term taking advantage of Softbank’s noted aggressive nature as well as the potential from Clearwire’s deep spectrum assets.

Of course, all of this could be temporary as industry leaders expect the market to at some point consolidate to just three nationwide operators, with most predicting regulators would only be open to such a move if it involved the No. 3 (currently Sprint) and No. 4 (currently T-Mobile US) carriers combining to combat larger rivals.

Bored? Why not follow me on Twitter?

ABOUT AUTHOR

Editorial Reports

White Papers

Webinars

Featured Content