T-Mobile USA's push to get more subscribers with potentially weaker credit histories may be a dangerous game, according to a report by Dow Jones Newswires.
Analysts quoted by the outlet point to T-Mobile's decision to tout its Flex Pay program, a pre-paid type of service, as one sign that the carrier may be lowering its credit standards--though the analysts pointed out that they had not seen a material change in T-Mobile's credit standards. The carrier, a unit of Germany's Deutsche Telekom, declined to comment.
The push may reflect T-Mobile's desire to score younger customers who may not yet have credit histories. But T-Mobile risks higher churn, since subscribers who cannot pay their bills will often break their contracts. Analysts pointed to Sprint Nextel, which several years ago loosened its credit standards and suffered major churn as a result--problems that reverberate through to today.
Nonetheless, T-Mobile may be left with little recourse but to woo credit reprobates. The carrier reported 621,000 net new subscriber additions in the fourth quarter of 2008, down from 670,000 in the third quarter of 2008 and 951,000 in the fourth quarter of 2007. The number was the carrier's lowest since the second quarter of 2006. Meantime, flat-rate carriers like MetroPCS are recording record quarters; MetroPCS added 684,000 net subscribers in the first quarter, its best ever.
- see this article (sub. req.)
T-Mobile's $50 unlimited voice plan goes nationwide
T-Mobile introduces monthly payment plan for phones
T-Mobile USA revenue jumps despite weak subscriber growth
T-Mobile USA has 670K net adds in Q3
T-Mobile adds 668,000 subs, lowest number since 2006
T-Mobile will have 3G in 27 markets by year's end