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Report: Leaked T-Mobile ad confirms plan to pay families' termination fees

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T-Mobile US (NYSE:TMUS) reportedly yanked an online banner ad Tuesday night that confirmed its plan to pay families' early termination fees when they cancel service with rival carriers, switch to T-Mobile and trade in their devices, a move designed to maintain the self-proclaimed "uncarrier's" momentum in stealing customers from its competitors.

Droid Life provided a dead link to a "404: File not found" error page and an image of what it claimed what a T-Mobile ad that was formerly found at the URL on the operator's website Tuesday evening. The ad's fine print stated that qualifying service and device purchase with a port-in from AT&T, Verizon Wireless or Sprint was required to take advantage of the offer. The ad also indicated there will be a limit of five transferred lines per account.

T-Mobile is planning a major announcement today at the 2014 Consumer Electronics Show, which is widely expected to include this family plan campaign. The promotion has been rumored since December as the latest salvo in T-Mobile's "uncarrier" strategy. Related rumors have indicated that T-Mobile will pay up to $350 per family when they bring over at least three lines. AT&T's (NYSE:T) recent announcement that it would offer a bounty of $450 in credit to new customers who switch from T-Mobile US and trade in their smartphones has been seen by some analysts as a preemptive strike.

T-Mobile, the No. 4 U.S. wireless operator, has emerged as a threat to its three larger competitors over the past year. During the Citi 2014 Internet, Media & Telecommunications Conference Tuesday in Las Vegas, T-Mobile CMO Mike Sievert provided last week's number porting ratios. T-Mobile's porting ratio with AT&T was more than 2 to 1, the ratio with Sprint (NYSE:S) exceeded 3 to 1 and the ratio with Verizon Wireless (NYSE:VZ) was over 1, he said.

Sievert said T-Mobile is drawing the majority of its gross subscriber additions from families. New additions also skew a bit towards males as well as urban and suburban rather than rural, he said. New customers also tend to have higher credit quality than T-Mobile was attracting previous to its uncarrier branding, Sievert added.

According to Kantar Worldpanel ComTech, "T-Mobile overtook Sprint as the third best-selling carrier for the three-month period ending in November 2013" by claiming 13.3 percent of sales for the quarter. Further, T-Mobile was the only major carrier to see year-over-year growth, up 6.3 percentage points, said the research firm.

"T-Mobile's 'un-carrier' marketing strategy, launched earlier in 2013, has succeeded by attracting feature phone owners looking to upgrade to their first smartphone," said Kantar. More than half--55 percent--of T-Mobile customers who bought LG Electronics and Nokia (NYSE:NOK) smartphones during November were first-time smartphone buyers, compared to just 39 percent of Apple customers, the firm added.

T-Mobile continues rapidly expanding its LTE coverage, which covers 209 million POPs. According to TmoNews, T-Mobile this week added 14 more markets to its list of areas covered with LTE, with a couple of clusters located in Florida and Michigan and service extending to some other states as well.

One question looming over T-Mobile's future is whether it will become part of Sprint sometime soon. During the Citi investor conference, Braxton Carter, T-Mobile's CFO, was asked to address rumors that Sprint is preparing to buy T-Mobile.  "It's just not possible for us to comment about that," he said.

"We're not running our business for a strategic transaction. We're very focused on creating shareholder value, as we've demonstrated during the year," he said.

According to Carter, T-Mobile's announcement earlier this week that it plans to buy lower 700 MHz A Block spectrum from Verizon shows that "we've taken away one of the final weaknesses in our platform to be truly viable on an ongoing basis."

However, Carter also said that T-Mobile believes further consolidation in the U.S. wireless industry is inevitable. "We think that with the duopoly out there there's actually much more of a competitive environment that would be created with the formation of third scaled national carrier," he said.

For more:
- see this Droid Life article
- see this The Verge article
- see this Kantar report
- see this TmoNews article
- listen to the Citi webcast

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