Analysts: T-Mobile's business plans could appeal to small businesses but not big enterprises

T-Mobile US' (NYSE:TMUS) new rate plans and offerings for businesses are likely going to have more success in the small and medium-sized business (SMB) market than with major corporations, where Verizon Wireless (NYSE: VZ) and AT&T Mobility (NYSE:T) are strongest, according to financial analysts.

"The move into enterprise will probably not be a near ­term needle mover for TMUS, as the larger incumbents can bundle wireless, wireline and cloud connections that make enterprise customers less likely to churn," Wells Fargo analyst Jennifer Fritzsche wrote in a research note. "Also, business customers tend to be less price sensitive and very concerned about network coverage and performance relative to certain retail customers."

Credit Suisse analyst Joseph Mastrogiovanni estimated in a research note that there are at least 50 million business customers that currently subscribe to a wireless carrier other than T-Mobile. "We expect T-Mobile to see the most success with small and medium-size businesses, where price may carry more weight in the decision making process than with enterprise," he wrote.

Under T-Mobile's new business plans, the more lines a business adds, the less it costs per line. Each line gets unlimited voice, texting and 1 GB of data to start. For lines 1-19, customers pay $16 per line, for lines 20-1,000 it cost $15 per line, and for lines 1,001 and above it costs $10 per line. If customers want to add more data there are multiple ways they can do that. T-Mobile is also offering unlimited and pooled data to business users, as well as other discounts.

Meanwhile, Jefferies analysts Mike McCormack, Scott Goldman and Tudor Mustata wrote in a research note that Sprint (NYSE: S) might feel the most pressure from T-Mobile's new plans. "As with wireline business competition, we expect AT&T and Verizon to focus on higher-end enterprise accounts with negotiated contracts and bundled wireline-wireless contracts," they wrote. "We see the plans as more troublesome for Sprint, with a subscriber base that includes former Nextel SMB customers. Given T-Mobile's low business revenue market share we see T-Mobile's new offers providing incremental upside with little risk of revenue cannibalization."

BTIG analyst Walter Piecyk told FierceWireless that not every promotion needs to address the entire market in order to be successful. He noted that "there are certainly plenty of businesses that operate within the population-dense areas where T-Mobile not only provides coverage but is delivering superior speeds, as evidenced by this most recent OpenSignal report."

Piecyk said it's difficult to know many businesses there are paying for cell phone service in markets where T-Mobile's network is strong in terms of coverage and speed. "But attractive pricing for a business customer, and the incremental benefit that it provides the family by eliminating that first-line charge, should move the needle," he said. "We'll just have to see how much."

Mike Katz, T-Mobile's vice president of market, said that to push the plans T-Mobile is going to add hundreds of new dedicated business sales representatives, and that its entire 15,000-person sales force is being trained on the new plans.

Katz said that T-Mobile will focus on driving traffic to its retail stores to promote business sales as well as through wholesale sub-dealers and "value-added reseller partners" that specialize in selling converged telecommunications services.

T-Mobile's new offering will compete with Sprint's new Workplace-as-a-Service (WaaS) platforms, which costs $200 per month per person, which the carrier Sprint says is about half the cost of comparable solutions. The platform includes a dedicated customer care contact, Wide Area Network connectivity, enterprise-grade managed Wi-Fi, enterprise-grade voice along with local and long-distance voice, audio and video conferencing, online collaboration, instant messaging and presence tools, mobile device management support across multiple carriers as well as bring-your-own-device support. The offering also includes optional Sprint wireless plans for smartphones and tablets that Sprint will offer at discounted prices.

T-Mobile CEO John Legere dismissed Sprint's plan. "Sprint could give away service in the business or the consumer side because their network is completely dead and everybody knows it," he told Bloomberg TV. "What Sprint announced recently was an age-old bundle service per seat where you try to aggregate everything that happens in the office place. We're not fooling around with that. This is wireless services and we are focusing straight in there, and I have very little concern about Sprint."

AT&T spokesman Mark Siegel told FierceWireless that AT&T provides businesses "unparalleled performance, value and choice. Unlike many others, we offer comprehensive global services across wireless and wired technologies that no single competitor can match. Millions of businesses of all sizes turn to us to address their daily opportunities and challenges and we help anticipate those in the future."

AT&T counts nearly 4 million business customers, he said. The carrier also provides cloud, security, hosting, application management, unified communications, VPN, VoIP and other services.

Yet AT&T's business plans are also more expensive and complex than T-Mobile's. For example, its business voice plans start at $39.99 per month for up to 450 minutes and go up to $199.99 for up to 6,000 minutes. AT&T's enterprise data plans range from $45 per month to $65 for 5 GB. AT&T also offers pooled data plans for enterprises, ranging from $20 per month for 300 MB to $80 for 10 GB.

Verizon introduced new business plans earlier this month, starting at $65 per month for unlimited voice, texting and 2 GB of data for smartphones, up to $105 per month for a plan with 10 GB. Those plans include shareable data but do not include access fees per smartphone. Verizon said a small business customer with five smartphones would pay $325 for access with 10 GB of data to be shared among all lines. The plans also offer unlimited domestic voice and messaging, unlimited international messaging, mobile hotspots, and corporate email through Good Technology, Exchange Active Sync or Lotus Notes.

For more:
- see this ValueWalk article

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