T-Mobile US (NYSE:TMUS) is almost done transitioning customers on its legacy plans to its more recent no-contract Simple Choice plans, and argues that customers who are being moved to the new plans are getting more benefits for basically the same price.
At the end of the third quarter, T-Mobile said that 84 percent of its 24.807 million branded postpaid customers were on Simple Choice plans, which works out to around 20.84 million customers (T-Mobile counted 52.89 million total wireless customers at the end of the third quarter). The carrier said it continues to expect 85 to 90 percent of its postpaid subscriber base to be on Simple Choice plans by year-end. More importantly, T-Mobile is not planning to push much beyond that point.
"We're pretty much at the end of penetration of our base into Simple Choice in the whole EIP construct," T-Mobile CFO Braxton Carter said on the company's third-quarter earnings conference call, according to a Seeking Alpha transcript of his remarks. "We ended the quarter at 84%, our guidance for the year end on the upper side of that range is 90%. And 90% is about as far as it's going to go because some of our partners and other offerings don't offer Simple Choice or EIP."
By moving customers to Simple Choice, T-Mobile gets customers onto plans where they are paying off their devices in installments every month, increasing equipment revenues. Additionally, getting customers on one kind of plan likely makes it easier to perform back-end billing operations.
T-Mobile has been actively transitioning groups of customers from its legacy calling and data plans to its Simple Choice plans for the past year or so. It generally gives legacy customers 60 days to either move to Simple Choice or switch from T-Mobile. Some customers may end up paying more, depending on which plan they choose, but most are not paying more, T-Mobile said.
Customers are notified via letters and postcards as well as text messages of the impending plan changes. T-Mobile argues that customers get more benefits by moving to Simple Choice, including unlimited voice and texting, music streaming that doesn't count toward data usage, and unlimited international data and texting in more than 120 countries.
"Some of our customers are still on older legacy plans and haven't gotten these benefits, so we've been working with them to upgrade to Simple Choice," T-Mobile said in a statement. "Most can get all of the Simple Choice benefits for just 1 or 2 cents more per month. We think it's a fair price for all the incredible value we've packed in."
- see this T-Mobile website
- see this TMoNews article
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