Will Apple Benefit From the War Between T-Mobile and AT&T?
T-Mobile's been on a tear recently. The company's Un-carrier moves have led to impressive customer gains. The company's success, however, hasn't gone without a response from the competition. AT&T responded last week to T-Mobile's customer acquisition success with $450 in credits. But this week T-Mobile has jumped in with its own incentives for customers to switch to its network. As the carrier war for customers rages on, companies like Apple, whose costly smartphones are highly dependent on subsidies, financing, and credits, will likely benefit.
T-Mobile's planned assault
T-Mobile has generated more than 1.6 million total customer additions and has reported positive branded postpaid net customer additions for three quarters in a row. Its success in acquiring customers follows T-Mobile's implementation of an aggressive plan to disrupt the industry. It's referring to the plan as Un-carrier -- and it's working.
"Our Un-carrier moves have clearly upended this industry," T-Mobile CEO John Legere said in a press release yesterday that highlighted preliminary fourth-quarter results. "Over the past 12 months, 4.4 million customers have come to T-Mobile in response to greater flexibility and choice. We have clearly struck a chord with customers and will continue to look for ways to expand on that in 2014."
T-Mobile has rolled out its Un-carrier initiative in four phases so far, beginning in March 2013.
- Introduced "Un-Carrier" plans that said goodbye to subsidies, replacing them with interest-free financing.
- Introduced a "Jump" program that allows subscribers to upgrade their phones at smaller intervals.
- Added international texting and 2G data in 100 countries to its Un-Carrier smartphone plans.
- Offered credits to customers switching from the three major national carriers.
The latest battle
The fourth phase of T-Mobile's Un-carrier moves, announced yesterday, looks like a response to AT&T's just-announced credits. T-Mobile's move offers credits to switching customers from AT&T, Sprint, and Verizon. But as The Wall Street Journal author Ryan Knutson said after AT&T announced its $450 of credits, T-Mobile was already widely expected to announce a similar promotion before AT&T's was announced. So who knows which carrier was planning to offer credits to switching customers first?
T-Mobile's credits are irrefutably more aggressive than AT&T's. They offer up to $350 in early termination fees per line (up to five lines per family) and up to $300 in credits for phone trade-ins. That's potentially $650 in credits per line for customers switching from any of the three major national carriers.
Time for a new iPhone?
Since T-Mobile's announcement detailing the move said the deal would only be available at "participating T-Mobile location[s]," I called around to see just how prevalent the deal was. Every location I called was well aware of the deal.
The intense competition between carriers is great news for Apple investors. As long as they are fiercely competing for customers, the subsidies, interest-free financing, and credits that help drive iPhone sales will remain intact.
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The article Will Apple Benefit From the War Between T-Mobile and AT&T? originally appeared on Fool.com.Fool contributor Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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