Putting a price on T-Mobile's ‘team of experts’: $80M rise in EBITDA

Customer care improvements could raise earnings. (Pixabay/qimono)

T-Mobile announced a new customer care effort this week called “team of experts” that the company said will set it apart from its competitors. And that effort could ultimately result in an $80 million increase in T-Mobile's EBITDA margin, according to research and consulting firm Strategy Analytics.  

Citing data from the firm’s 2016 customer survey—which found that 7.7% of users agreed that a “priority customer care line with no wait times” would most influence their decision to stay with current provider—Strategy Analytics said that T-Mobile's new “team of experts” approach to customer care could equate to over 400,000 fewer postpaid phone customers churning away from the operator. 

“Many operators say in their strategy that they are customer centric, but implementing that well can be a competitive differentiator,” wrote Strategy Analytics’ Susan Welsh de Grimaldo in a post on the firm’s site. “With network parity and high smartphone penetration in the U.S., carriers need to find ways to differentiate and manage churn. Reducing customer frustration is a good move. Getting the right tools with predictive analytics for customer care teams is essential. So it is combining human and digital for the best of both that is needed.” 

A number of Wall Street analysts also offered a positive view on T-Mobile's latest announcement, partly because the carrier’s “Un-carrier” announcement this week wasn’t a price cut. 

“Given the precedent of more (price) disruptive UnCarrier moves in the past (ie: BingeOn, Netflix on us, including taxes/fees in plans), we believe these latest announcements should be viewed more positively for the broader industry,” wrote the analysts at Deutsche Bank Research in a note to investors this week. “These announcements (detailed below) do not introduce pricing cuts, and we do not expect them to trigger a wave of elevated industry switching.” 

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Separately, the analysts at Wall Street research firm Macquarie wrote to investors that T-Mobile's “team of experts” customer care announcement could further improve the operator’s already low 0.95% postpaid churn rate. The firm also said it now expects T-Mobile to notch a gain of 715,000 postpaid net customer additions in the third quarter and fully 3.7 million for the full year of 2018. 

T-Mobile's customer care announcement this week coincided with deals the operator struck with Pandora (for a year of the streaming music provider’s premium service for customers) and Live Nation (for discounted tickets and other exclusive perks).