T-Mobile made a splash last week when it unveiled a new unlimited promotion, offering four lines with 5G access for $100 per month. Still, some financial and industry analysts don’t see the deal as that disruptive, or even all that new.
In terms of the Value Essentials price plan, Roger Entner, founder and analyst at Recon Analytics, told Fierce Wireless it’s “nothing new” and that T-Mobile already had similar pricing on earlier plans.
LightShed Partners analysts Walter Piecyk and Joe Galone also didn’t seem shocked by the offer. In a Friday note titled "What Big Price Cut?," the analysts pointed out that the new Value Essentials promotion is only $5 per month less than T-Mobile’s usual Essentials plan, which already offers a third line for free.
In fact, “customers would have to get exactly 4 lines of service to save money with the new Value Essentials plan compared to the existing Essentials plan,” wrote LightShed. Customers on the regular plan could get up to three lines for $90 per month, while four lines would hit $105 per month (compared to $100 per month for the new offer). The new Values Essentials offer isn’t applicable until users sign up for four lines, they noted. The price point falls even with T-Mobile’s regular Essentials plan, and actually costs more at $140 per month for five lines versus $135 per month.
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LightShed cited a possible attempt to migrate Sprint subscribers or retain those customers so they don’t leave for other carrier, as potential motives for tweaking a plan that essentially already exists in the market. T-Mobile is set to integrate the Sprint brand on Aug. 2. As Pieyck noted, the promotion is very similar to existing Sprint plans.
Sprint already offered four lines for $100 per month, though T-Mobile said it included step-ups that increased consumers’ bills by as much as 60% increase in one year.
What is new: T-Mobile’s offer to charge customers $5 more and give them a 5G smartphone (the Samsung Galaxy A71 5G through bill credits and eligible trade-in).
“That is the kicker here, that’s the awesome part of the offer,” Entner said. “If you don’t take the phone, it’s not that exciting.”
T-Mobile said it “was taking the gloves off” with the new offer. Introducing $30 per line per month with a new 5G phone, “that is aggressive,” Enter said, noting they’re still really good devices.
It could also help T-Mobile populate its young 5G network, which in the early days usually sees limited traffic as most subscribers don’t have 5G-capable handsets.
“It’s an aggressive offer, usually you don’t get that aggressive unless you want to accelerate things,” Entner said, whatever that plan might be. “[Carriers] don’t do these things out of the goodness of their heart.”
Competitive vs. AT&T, Verizon, with network boost at play
T-Mobile is still staying ahead of the competition with its new price plan, and the operator’s network could soon get a boost from 2.5 GHz spectrum it acquired from Sprint.
LightShed pointed out that T-Mobile’s new Value Essentials Plan is $30 to $40 less than Verizon or AT&T for four or more lines. AT&T last week added 5G access to its Unlimited Start plan, which costs $140 per month for four lines – Verizon’s Starter Unlimited costs the same but without 5G access. Verizon’s four-line Do More unlimited with 5G access is $180 per month.
“While the new rate plan is not notable relative to what T-Mobile already had been offering, it is still at an impressive discount to the comparable entry-level unlimited plans offered by its peers,” wrote LightShed.
AT&T and Verizon, which usually price at a premium, are both a bit caught between a rock and hard place as T-Mobile’s network build ramps up, Entner said. “T-Mobile’s network is getting stronger by the day and they’re charging less.”
The question then is, when will T-Mobile’s network surpass that of AT&T and Verizon. And while the definition of "better" varies, more spectrum “certainly helps tremendously,” Entner said. At the moment, T-Mobile has an arsenal of mid-band spectrum that it’s working to activate before Verizon can move on C-band spectrum it hopes to acquire at auction later this year.
“You’re the premium provider and you have an increasingly hard time justifying that premium,” Enter noted about Verizon’s predicament if T-Mobile takes over the network crown, adding that Wall Street rewards both Verizon and AT&T for profitability rather than growth.
One of T-Mobile’s arguments for the merger with Sprint was that greater network capacity would allow it to stay aggressive on price. Still, LightShed believes network is a much bigger factor when it comes to the ability to compete for customers than offering lower prices.
“We expect the gap between T-Mobile’s pricing and its peers to tighten as the deployment of the 2.5 GHz spectrum delivers differentiated network performance,” wrote Piecyk.
Analysts at LightShed aren’t picking final sides yet as to whether the gap will close because T-Mobile starts charging more or Verizon charges less, but “are leaning heavily toward the former.”