T-Mobile CFO: Around 50% of customers are on family plans, carrier will continue family plan promotions

T-Mobile (NYSE:TMUS) CFO Braxton Carter said that "a little over 50 percent" of T-Mobile's subscribers are on the carrier's family plans, and that those family plans cover an average of around 2.4 lines of service. He said the carrier sees "substantial opportunity" to sign up additional customers to T-Mobile's family plans, and he said the carrier will continue to offer "pulsed" family plan promotions in the future to do so.

As with most family plan offerings from other wireless carriers, Carter noted that customers on family plans at T-Mobile often have a higher customer lifetime value than single-line subscribers, and they cost the carrier less money to acquire than single-line subscribers. However, he noted that customers on family plans often pull down T-Mobile's average revenue per user.

T-Mobile initially launched its family plan in July 2014 with four lines of service for $100 per month. Late last year the carrier launched a new family plan promotion for its Simple Choice customers that offers unlimited voice, texting and LTE data for two lines for $100 per month. The move undercut similar offers from Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE: T) and Sprint (NYSE: S). 

Under T-Mobile's "Un-contract" plan, which the company announced in mid-March, T-Mobile pledged that its rates would not go up, but may go down. Further, customers with promotional pricing plans are allowed to keep those prices as long as they are T-Mobile customers. For example, customers with T-Mobile's promotional plan last year of four lines for $100 with up to 10 GB of LTE data (2.5 GB per line) can keep that plan (the plan was going to drop down to 1 GB of data per line after 2015).

In comments today at the J.P. Morgan Technology, Media and Telecom Conference, Carter said T-Mobile may expand its offerings for families in the future, though he declined to provide details. Indeed, he made similar comments during T-Mobile's quarterly investor call: "We're not going to talk about some of the future innovations that we have plan, but I think uncarrier 10 coming soon, we're excited about that as well as other innovations throughout the year. I think one of the challenges we have as a management is with the innovation and things we are bringing into marketplace: How can we continue to target these family units … [at] Verizon, AT&T, with a little bit of ARPU dilution," he said, according to a Seeking Alpha transcript of his remarks.

In other comments at the J.P. Morgan conference today, Carter said that around 5 to 6 percent of customers who are eligible for T-Mobile's "Smartphone Equality" program are signing up for it. Introduced early this year, T-Mobile's Smartphone Equality program gives every customer with a monthly voice plan who has made or makes 12 consecutive on-time monthly bill payments access to zero-down financing for smartphones--regardless of their credit score.

"The management of credit is so critical," Carter said.

Separately, Carter also said that few people make use of T-Mobile's "Test Drive" service. T-Mobile introduced its Test Drive in June 2014, giving interested customers an iPhone 5s and unlimited nationwide service to take T-Mobile's network for a "data-intensive, seven-day spin at no cost whatsoever." The carrier is currently pushing a similar offering specifically for Verizon Wireless (NYSE: VZ) customers under its "Never Settle for Verizon" campaign.

However, Carter said that "most people just come in and sign up" for T-Mobile service, without taking the test drive. He said that the carrier's Test Drive offering "probably has the lowest 'take rate' of any of the uncarrier things we've done."

Carter also addressed T-Mobile's ongoing buildout of its 700 MHz A Block spectrum, which sits on Band Class 12. He said the carrier expects to roughly double its geographic coverage by building out the spectrum in rural areas. He said by the end of 2015, T-Mobile expects to cover around 1.6 million square miles of country in the United States, or roughly 300 million POPs--up from a little under 1 million square miles today. "It makes a real difference," he said. The United States comprises roughly 3.8 million square miles total.

Carter added that T-Mobile is hopeful that Apple (NASDAQ: AAPL) will add support for T-Mobile's 700 MHz Band Class 12 to its next iPhone, which many expect to be called the iPhone 6s and to be released in the fall.

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