T-Mobile sets its sights on AT&T's M2M customers

T-Mobile CFO Braxton Carter, left, looks on as CEO John Legere speaks earlier this year. Source: T-Mobile

T-Mobile continues to aggressively build out VoLTE in an effort to free up older spectrum and refarm it for newer technologies. But the carrier is maintaining some older airwaves in the hopes of poaching some M2M customers being forced off of AT&T’s 2G network.

“Until you get voice and data on LTE, you can’t refarm spectrum dedicated to legacy technology,” T-Mobile CFO Braxton Carter said at an investor conference Thursday. Sixty percent of T-Mobile’s spectrum is being used for LTE, he said, and another 35 percent will be refarmed.

But that remaining 5 percent will stay in operation for M2M purposes, which often don’t require hefty data transmissions. And T-Mobile is targeting M2M users currently on AT&T’s 2G network, which will be shut down by the end of the year.

“We are committed to keeping a very thin layer of legacy GSM out there for our M2M (business),” Carter said. “And that’s a unique opportunity in targeting what’s happening at AT&T, where they’re shutting down all 2G and stranding a lot of M2M players.”

Roughly 6 million AT&T customers still use 2G, AT&T CFO John Stephens said two weeks ago. That’s about half as many as were on that network a year ago, and “most or virtually all of those” are on connected devices such as M2M gadgets. And the migration of those customers off the older network has paid dividends, he said.

“So what you’ve seen over the last year with these record margins has included the impact of reducing this 2G base,” Stephens said. “So we’ve been going through this for a full year or longer, and you’ve been witnessing it, you just may not have noticed our responses. And we’ve been putting up record margins and really great churn results.”

Indeed, Carter spent much of Thursday’s presentation arguing that T-Mobile’s strategies often differ markedly from those of its competitors. For instance, nearly every major carrier rushed to leverage the recent launch of the iPhone 7 with promotions that allowed users to trade in an iPhone that had been paid off to receive the newer model free.

Unlike its rivals, though, T-Mobile opted to hold on to those trade-ins rather than selling them to a third party for resale elsewhere. The carrier was well positioned to do so, Carter said, because it has a lower percentage of iPhone customers among its base than other major U.S. carriers.

“We don’t sell them on the third party market,” Carter explained “We deploy them organically within our ecosystem for the highest value creation -- be it warranty exchanges, be it insurance claim-fulfillments, be it to sell certified refurbished product in certain of our channels -- where you can realize much more than the standard trade-in value on that handset.”

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