Verizon, T-Mobile and AT&T are all withdrawing their buy-one, get-one offers on some of the market’s top smartphones, an action that reflects the relatively benign competitive environment in the wireless industry.
However, some industry experts believe this is just the lull before the storm, and that operators may engage in significant competitive promotions around devices like the iPhone XR during the critical fourth-quarter holiday shopping season, which typically kicks off during Thanksgiving.
“T-Mobile and Verizon in late September pulled their BOGO offers, AT&T has added TV/Internet requirements to its BOGO, and Sprint has raised Galaxy switcher pricing while easing up on Kickstart and ‘flash sale’ offers,” wrote Wave7 Research, an analyst firm that closely tracks promotions by wireless network operators. “Wave7 Research believes that this is likely not a secular trend, just a lull between the iPhone XS launch on 9/21 and the iPhone XR launch on 10/26.”
Last month when Apple launched its new iPhone XS and XS Max, operators generally offered BOGO deals around the expensive devices that provided up to $700 off a second phone, albeit only when customers added a new line of service.
“While this is admittedly more aggressive relative to the seasonal lull seen in 2Q, this is fairly in-line with 1Q ‘BOGO-centric’ deals we saw earlier this year. In addition, we don't believe this year's offers indicate a ‘ratcheting up’ of competitive intensity (particularly relative to prior years), as some bears had feared,” wrote the analysts at Wall Street firm Deutsche Bank Research in a note to investors in September following the launch of Apple’s new iPhones.
But now, as noted by Wave7, even those BOGO offers are no longer available on Apple’s newest devices. The same goes for some of the BOGO offers that operators offered on new Android phones, including those from Samsung.
However, Wave7 and other analysts are warning that competition may heat up nearer to the Thanksgiving holiday shopping season, and could center around the less expensive iPhone XR. Indeed, Cliff Maldonado of BayStreet Research noted that the iPhone XR may well enjoy significant promotions by operators as the device offers many of the same features as the iPhone XS and XS Max but with a more tolerable price tag.
Finally, another major trend that could affect the wireless industry’s fourth quarter is operators’ efforts to migrate prepaid customers into more expensive postpaid plans. “Competitive focus recently also appears to be on upgrading pre-paid subs to higher end plans based on new higher priced pre-paid unlimited pricing structures announced by both Metro/TMUS and Cricket/T,” wrote the Wall Street analysts at Barclays in a recent note to investors. “The pricing gap between pre and post paid should continue closing thereby acting as a continued tailwind for postpaid subs. Therefore, T and TMUS are likely to continue as the preferred telecom stocks into the quarter.”
Indeed, T-Mobile recently rebranded its MetroPCS prepaid brand as “Metro by T-Mobile” in part to bring the two offerings closer together.