Analysts: T-Mobile's international roaming targets business users, but may not win them over

T-Mobile US' (NYSE:TMUS) new plan to essentially eliminate international data roaming fees in more than 100 countries seems designed specifically to attract enterprise customers and large business accounts. However, analysts said limitations in the offer could make that a tough slog for a carrier that has historically not had a large B2B presence.

Starting Oct. 31, T-Mobile said its Simple Choice individual and business customers will automatically get unlimited data and texting in more than 100 "Simple Global" countries worldwide, and will only pay 20 cents per minute for voice calls when roaming in the same countries. However, the data rates will be capped at EDGE speeds of around 128 Kbps, though the company will offer various levels of speed boosts to customers who want faster speeds. The company is pricing those speed bumps at $15 for 100 MB per day; $25 for 200 MB per week or $50 for 500 MB for two weeks.

T-Mobile is clearly pitching the program at business customers. The carrier said that, according to a 2013 CCMI and Truphone survey, more than half of U.S. mid- to large-size businesses have company mandates to reduce their international roaming costs. Further, over the past three years almost 50 percent have increased their spending on international roaming and more than one third are spending an average of $1,001 to $3,500 per user each month for international roaming.

The carrier also said that, according to a Gerson Lehrman CIO survey from November 2012, 92 percent of CIO respondents said that overall wireless costs were too high and 60 percent of CIOs specifically cited the need address their pain points around the costs associated with international voice and data roaming.

"It's a good step to get the attention of a market that has largely ignored T-Mobile's presence and which spends a lot on their monthly phone bills," BTIG analyst Walt Piecyk told CNET.

However, the speed limitations could inhibit adoption among customers who need faster service, analysts said. "We believe the headlines can grab attention and build awareness that are likely objectives of the promotion, while the data roaming limitations to 2G networks may limit the appeal of T-Mobile's offer," Citi analysts Michael Rollins and Simon Weedon wrote in a research note.

Maribel Lopez, an analyst at Lopez Research, said the plan is "big deal" for businesses looking to save money, but that it had limitations. "You can't have it both ways," he told CNET. "There's no fast, dependable service that's affordable."

"Free international data roaming will be limited to 2G speeds, and tethering is not included with the offer," the Citi analysts wrote. "Wi-Fi calling and texts over Wi-Fi will cost 20 cent per minute/text. Furthermore, customer devices need to be compatible with the spectrum frequencies in use in the roaming country. While customers travelling to Mexico and Canada would likely be able to use all of T-Mobile's currently-offered devices, those travelling outside of North America may need to have quad-band devices to support compatibility with the company's promotion. T-Mobile also discloses that service may be terminated or restricted for 'excessive roaming or misuse,' which was not specifically defined on the website."

New Street Research analyst Jonathan Chaplin said the new plan is an "incremental positive" step for T-Mobile. "The attention generated by the international roaming package could help TMUS maintain its subscriber growth momentum for the time being," he wrote. "At the least, it will generate foot traffic; massive roaming charges have been a sore point. However the fact remains that TMUS only offers 2G data while roaming internationally, and 3/4G data is not that much cheaper than the competition. While we expect this package to help TMUS maintain its momentum, we don't expect the same type of impact that Un-Carrier 1.0 had."

For more:
- see this CNET article

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