Analyst: T-Mobile to trail Sprint with Jump On-Demand adoption, 25% of subs will sign up in 2016

Analysts at Jefferies predicted that 25 percent of T-Mobile US' (NYSE:TMUS) customers will choose the carrier's new "Jump! On Demand" handset upgrade program next year. "We note that our forecast is meaningfully lower than Sprint's ~50% leasing take rate, as unlike T-Mobile's offer, Sprint's leasing offer is cheaper than its comparable EIP offer," wrote Jefferies analysts Mike McCormack, Scott Goldman and Tudor Mustata in a note to investors this morning.

Under T-Mobile's new program--which the carrier said is an "amped" version of its original "Jump!" handset upgrade program T-Mobile introduced almost two years ago--customers can upgrade their smartphones up to three times every 12 months. Customers can upgrade to a new smartphone for $0 down and pay no sales tax with qualifying credit, followed by a monthly device payment.

When customers want to upgrade, they will need to bring in their existing phone, show that it is in good working order and move to a new phone. T-Mobile is removing the $10 monthly program fee that had been associated with Jump, but is also removing insurance--so if customers want phone insurance, they will need to pay an extra $8 per month.

Customers can pay off their Jump On Demand plan at any time by paying the remaining payments in advance and keep their phone without penalty. 

Under T-Mobile's regular Jump program, which is continuing, customers need to pay $10 per month and sales taxes at the time of purchase. Customers also need to pay off 50 percent of their phone's cost before upgrading. 

Jump On Demand is essentially T-Mobile's response to Sprint's handset leasing options, in which customers pay a monthly fee on their device and then turn it in after two years. However, according to the Jefferies analysts, T-Mobile will treat the program slightly different in its financial accounting.

"T-Mobile will book no equipment subsidy at point of sale, but book the lease payments as equipment revenue, flowing straight to EBITDA," the analysts wrote. "However, net cash changes will be similar to the current EIP offer given the similar monthly payments. Unlike Sprint's leasing plans, T-Mobile will not capitalize a portion of the handsets as Jump! is only offered in company stores. We expect the lease accounting treatment to benefit EBITDA by ~$230mn (~3%) in '15 and $1.6bn (~18%) in '16."

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