T-Mobile launches unlimited family plan starting at $100/month, undercuts rivals

T-Mobile US (NYSE:TMUS) launched a new family plan for its Simple Choice customers that offers unlimited voice, texting and LTE data for two lines for $100 per month, undercutting offers from Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE: T) and even Sprint (NYSE: S).

T-Mobile lets customers add up to eight more lines on the plan for $40 more per line per month. However, that expense does not include the cost of a new phone.

Nonetheless, the plan is cheaper than offerings from Verizon and AT&T, which no longer provide unlimited data, and is also $20 per month cheaper than two lines with unlimited data on Sprint (Sprint offers a $60 month unlimited plan for individuals and then a variety of family plans with shared data).

The new unlimited family plan from T-Mobile will only be available for a limited time, though T-Mobile did not say when the offer will end. However, once customers sign up they can keep the unlimited family plan as long as they stay on it.

T-Mobile is also offering the unlimited plan to businesses. The business plan starts at $100 for two employees and is $40 more per employee per month for as many lines as businesses need.

In an interview with Re/code, T-Mobile CEO John Legere said T-Mobile wanted to offer a family plan promotion that wasn't merely a response to plans from other carriers--such as Sprint's offer to cut the price of AT&T and Verizon bills in half if a customer switches to Sprint and buys a new phone from Sprint.

Legere said T-Mobile has enough capacity on its network to offer the unlimited plan. "Right now we are in a great spot," Legere said. "Unlimited is what (customers) want and need right now."

Additionally, for a limited time, T-Mobile is reviving its offer of 10 GB of LTE data for $100 per month for a family of four (that's 2.5 GB per line). The extra data will last through January 2016, and then customers will get 1 GB per line. T-Mobile had offered that promotion from August to the end of October; the carrier said it was its most popular promotion in the past decade.

In a research note, Jefferies analysts Mike McCormack, Scott Goldman and Tudor Mustata wrote that T-Mobile's promotions are "a clear response to the current competitive environment." While the unlimited plan "is a discount to the current comparable $140 offer for two lines, it requires each subscriber to be on an unlimited line, implying that some subscribers (certain subscribers on family plans with more than two lines) may have to price up to opt into the new offer; today roughly one-third of subscribers join on unlimited plans."

Speaking at the UBS Global Media and Communications Conference, T-Mobile CFO Braxton Carter said that T-Mobile continues to take more customers from other Tier 1 carriers than it is losing to them. "These promotions will be accretive to our business for the balance of the year," especially in terms of average revenue per user, he said.

"We have a lot of momentum going on," Carter said, adding that T-Mobile will continue to launch new "uncarrier" initiatives in the months ahead. "We're going to continue to innovate."

Carter said that T-Mobile is getting the majority of its switchers from Verizon and AT&T. "We did not see a softening of demand" at the end of the third quarter and early fourth quarter, he said.

At the end of October, T-Mobile increased its guidance for total branded postpaid net additions for 2014 to between 4.3 million and 4.7 million, up significantly from the prior guidance of 3 million to 3.5 million. At the time, Jefferies analysts noted that the new target was narrowly above Wall Street's forecast of 4.2 million and "still conservative" compared to their forecast of 4.9 million. The guidance implied branded postpaid net adds of 700,000 to 1.1 million in the fourth quarter, which they said is a "conservative target."

While T-Mobile has momentum, Carter acknowledged that implicit in guidance was a sequential slowdown from the third quarter. T-Mobile added nearly 1.38 million total branded postpaid subscribers in the third quarter, its best quarter ever of branded postpaid net subscriber adds.  

For more:
- see this T-Mobile release
- see this Re/code article
- see this CNET article
- see this Bloomberg article

Related Articles:
AT&T ends 15 GB promotion after 13 days
AT&T cuts price of 15 GB shared data plan by $30
Sprint cuts $10 from 12 GB and 16 GB shared data plans
Verizon wades into double-data promotional battle with Sprint, AT&T
Sprint doubles data of its shared plans in response to AT&T's similar promotion
AT&T to double data for high-usage shared data plans through Oct. 31