At the beginning of the year, T-Mobile(NASDAQ: TMUS) said it planned to open 1,000 new T-Mobile stores, expanding its retail footprint to catch up with its network expansion. After the first quarter, T-Mobile had to update its outlook to 1,500 T-Mobile stores. T-Mobile's VP of Sales Jon Freier tweeted this week the company has opened 1,000 stores already this year, surpassing its original goal.
The footprint expansion represents a huge opportunity for T-Mobile. While the company has been able to continue stealing away customers from Verizon Communications(NYSE: VZ) and AT&T(NYSE: T), expanding its footprint outside of major metro areas presents additional upside for the wireless carrier.
30 million to 40 million new potential customers
T-Mobile expects its new stores to cover 30 million to 40 million new people. What's more, the competition in the areas where T-Mobile is opening new stores is much less intense than the metro areas it currently operates, giving T-Mobile a good opportunity to take market share.
T-Mobile already has strong brand recognition in these markets thanks to its national advertising campaigns, so it should be able to quickly capture market share. CFO Braxton Carter said a market share in the teens is achievable within a five-year time frame. That could mean an additional 5 million customers or so over the next five years just from the stores it's opening this year.
That growth will be in addition to the customers T-Mobile is still bringing in from the two-thirds of the country it covered with its retail stores in 2016. That growth is still going strong, with T-Mobile adding 1.3 million customers in the first quarter between T-Mobile and MetroPCS. That's four straight years of adding over 1 million customers every quarter.
RELATED: The evolution of cell phones and smartphones
Evolution of cell phones, smartphones
Evolution of cell phones, smartphones
UNSPECIFIED - AUGUST 02: M2 Pocket Phone, manufactured by Excell Communications. Displayed with its headphones, leather protective case and user guide, the phone weighs approximately 0.75 kg. (Photo by SSPL/Getty Images)
UNSPECIFIED - AUGUST 02: Rabbit telepoint telephone by Hutchison Personal Communications Ltd, together with park and charge unit. Size of telephone is 400mm by 350mm by 100mm and weighs approximately 3kg. Rabbit was a British location-specific (Telepoint) telephone service backed by Hutchison, who later went on to create the Orange GSM mobile network. The Rabbit network was the best-known of four such services introduced in the 1980's, the others being Phonepoint, Mercury Callpoint and Zonephone. Although Hutchison had been issued a licence for Rabbit in 1989 it took until May 1992 before the service was launched. Telepoint services such as Rabbit allowed subscribers to carry specially designed (CT2) home phone handsets with them and make outgoing calls whenever they were within 100 metres of a Rabbit transmitter. (Photo by SSPL/Getty Images)
UNSPECIFIED - AUGUST 08: Mobile cellular telephone model M200 by Siemens AG, with one2one branding, less battery pack, 1991-2000 Dimensions: 190 by 65 by 35mm, weighing approximately 0.5kg. (Photo by SSPL/Getty Images)
UNSPECIFIED - AUGUST 02: Mobile cellular telephone, mobile Phone manufactured by Motorola, weighing approximately 0.75 kg. (Photo by SSPL/Getty Images)
UNSPECIFIED - AUGUST 02: The Vodac, by Vodaphone was produced between 1991-2000 and weighed approximately 0.5 kg. (Photo by SSPL/Getty Images)
UNSPECIFIED - AUGUST 08: Mobile cellular telephone model CM-H333 by Sony sitting in its charging stand. Dimensions: 185 by 55 by 70mm and weighing approximately 0.5 kg (Photo by SSPL/Getty Images)
UNITED STATES - DECEMBER 09: The Motorola company was founded by Paul V Galvin as the Galvin Manufacturing Corporation, in Chicago, Illinois, in 1928. In the 1930s the company began promoting portable car radios under the brand name ï¿½Motorolaï¿½ (a word suggesting sound in motion), and the company name was changed to Motorola Inc in 1947. By the end of the 1980s, Motorola had become the biggest worldwide supplier of cellular telephones. When it was launched in 1996, the pocket-sized StarTAC, at just 93g (3.1 ounces), was the worldï¿½s smallest phone and the first to operate continuously with dual detachable batteries. This example was manufactured by Motorola Inc in the United States. (Photo by SSPL/Getty Images)
UNITED KINGDOM - JUNE 20: Taking mobile phones apart by hand and sorting the pieces for recycling is expensive. This phone was designed by Joseph Chiodo, a researcher at Brunel University in Surrey, to 'recycle' itself. It is made from special metals and plastics which have 'memories' of their original shape. When heated up, they lose their current form and revert to the shape they remember: different parts are triggered to change shape at different temperatures. The phone then ï¿½popsï¿½ apart, ready for recycling. Pieces can be picked out for reuse and the parts containing toxins can be separated. (Photo by SSPL/Getty Images)
JAPAN - FEBRUARY 15: Launched on the 1st September 2000, the Nokia 3310 featured advanced messaging, personalisation with Xpress-on covers and screensavers, vibra feature, time management functions, voice dialling, picture messaging, predictive text input and games. It also introduced ï¿½mobile chatï¿½ using the Nokia Friends-Talk service, which allows users to have conversations using SMS (Short Message Service). This is a globally accepted wireless service that enables the transmission of messages between mobile users and external systems such as e-mail, paging, and voice-mail. (Photo by SSPL/Getty Images)
SINGAPORE, SINGAPORE: Shares order are displayed on the screen of mobile phone which uses the Wireless Application Protocol (WAP) services for e-trading in a demonstration at the launching of Asia Pacific's first Mobile E-Trading on WAP in Singapore 09 March, 2000. Singapore's leading retail stockbroking firms, Ong & Company Partners, signed an agreement in partnership with SingTel Mobile for for the co-marketing in the e-trading service called iROAM, the first transactional service of its kind to utilize the WAP platform in the Asia-Pacific region. (ELECTRONIC IMAGE) AFP PHOTO/Roslan RAHMAN (Photo credit should read ROSLAN RAHMAN/AFP/Getty Images)
CANNES, FRANCE: Shown is Sendo International's Z100 multimedia smartphone at a news conference during the GSM World Congress in Cannes, France February 21, 2001. The Z100 phone features a color screen and runs on the Microsoft smartphone platform. The phone also features Microsoft's Mobile Explorer for the Internet, Mobile Outlook, a Windows Media player and USB connectivity. The phone will be on the market in the autumn of 2001. AFP PHOTO/JEFF CHRISTENSEN (Photo credit should read JEFF CHRISTENSEN/AFP/Getty Images)
Young girls using mobile phones. (Photo by Jeff Overs/BBC News & Current Affairs via Getty Images)
SEOUL, REPUBLIC OF KOREA: A South Korean model displays a LG Electronic new DMB (digital multimedia broadcasting) mobile phone handsets which can show television broadcasts real time during an exhibition in Seoul on 15 November 2004. The South Korean electronics firm claimed the handsets were the world's first ground-wave DMB mobile phone. AFP PHOTO/WANG JUN-YOUNG (Photo credit should read WANG JUN-YOUNG/AFP/Getty Images)
CellphoneCamera-Sept. 20, 2005-Photo Illustration of cell phone camera use. As camera phones grow more common, expect to see more incidents such as the man facing mischief and harassment charges after a suspect was caught taking lewd photos of little girls in a Toronto grocery store. Already there is a term for such behaviour: 'upskirting' and 'downblousing,' (pictures being taken down womens tops) and web sites devoted to the practice. (Photo by Tannis Toohey/Toronto Star via Getty Images)
LONDON, ENGLAND - JULY 06: In this photo illustration the Twitter website is displayed on a mobile phone on July 6, 2009 in London. The social network site started in 2006 in California as a sideline project, but has grown into a global brand becoming one of the fastest growing phenomenas of the Internet. (Photo Illustration by Dan Kitwood/Getty Images)
Mobile telephones encrusted with diamond designs sit on display 23 November 2007 at one of Europe's most exclusive and trend-setting lifestyle trade fairs the Moscow Millionaire Fair 2007 in Moscow. The fair hosts the top names of the international luxury goods industry. AFP PHOTO / DIMA KOROTAYEV (Photo credit should read DIMA KOROTAYEV/AFP/Getty Images)
BERLIN - NOVEMBER 09: A young man checks out an Apple iPhone at a T-Mobile shop on the first day the mobile phone went on sale November 9, 2007 in Berlin, Germany. T-Mobile has the exclusive conract to sell the iPhone in Germany. (Photo by Sean Gallup/Getty Images)
(GERMANY OUT) several mobile phones on advertising folders - 01.11.2008 (Photo by wolterfoto/ullstein bild via Getty Images)
SPAIN - DECEMBER 02: A consumer holds Nokia's new handset the N97, during the Nokia World 08 event in Barcelona, Spain, on Tuesday, Dec. 2, 2008. Nokia Oyj, the world?s biggest maker of mobile phones, unveiled a new handset featuring a touch screen and full keyboard to challenge Apple Inc.?s iPhone and Research In Motion Ltd.?s BlackBerry devices. (Photo by Xabier Mikel Laburu/Bloomberg via Getty Images)
Israeli people wait to purchase the new iPhone 3Gs at an Apple store on December 9, 2009 in Tel Aviv, Israel. Hundreds of people lined up at the Apple Store in Tel Aviv to be the first to purchase Apple's new iPhone 3Gs which is faster than the previous iPhone 3G and has several new features. AFP PHOTO / JACK GUEZ (Photo credit should read JACK GUEZ/AFP/Getty Images)
Vertu Ascent mobile handsets are seen after assembly at Nokia Oyj's Vertu luxury phone division in Church Crookham, U.K., on Monday, Sept. 12, 2011. Vertu, started by Nokia Oyj's then-chief designer Frank Nuovo in 1998, has sold more than 300,000 phones in the last decade and seen 'high double-digit sales growth' since the start of 2010, President Perry Oosting said. Photographer: Matthew Lloyd/Bloomberg via Getty Images
PARIS, FRANCE - DECEMBER 07: A Windows phone 7 mobile phone sits on display at LeWeb Paris 2011 at Le 104 on December 7, 2011 in Paris, France. Since beginning in 2008, LeWeb Paris 2011 is the largest technology conference in Europe where Silicon Valley entrepreneurs and the tech world gather while often announcing new products. (Photo by Antoine Antoniol/Getty Images)
An Apple Inc. iPhone 5C smartphone sits on display inside the Orange SA store in Toulouse, France, on Wednesday, Nov. 20, 2013. France's gross domestic product fell 0.1 percent in the three months through September, national statistics office Insee said in an e-mailed statement. Photographer: Balint Porneczi/Bloomberg via Getty Images
NEW DELHI, INDIA - SEPTEMBER 15: Spice Android One Smartphone on September 15, 2014 in New Delhi, India. Running on stock Android the set is priced economically to target at people buying their first smartphone and costumers in developing world. Google manages the design, development, marketing, and support of these devices while all manufacturing are carried out by partnering original equipment manufacturers. (Photo by Pradeep Gaur/Mint via Getty Images)
A customer tries the touch screen feature on the new Apple Inc. iPhone 6s smartphone at a store in San Francisco, California, U.S., on Friday, Nov. 13, 2015. The 12.9-inch Apple Inc. iPad Pro tablet computer was released for sale in stores today and the Apple Pencil is available for order online. Photographer: David Paul Morris/Bloomberg via Getty Images
Discover More Like This
BACK TO SLIDE
Room to increase prices
Expanding its retail footprint also gives T-Mobile room to increase its pricing as it's now competing for a larger market. The company recently increased the price of its ONE Plus plan, putting it roughly in line with Verizon's unlimited plan. That could be just the start of price increases at T-Mobile as it starts to focus on cash flow.
But T-Mobile just set a record low postpaid churn rate in its first quarter. Combined with the new greenfield markets its retail operations are expanding into, it can afford to see its net additions in existing markets wane a bit. Importantly, existing customers can keep their current pricing for as long as they keep their current plans. That should help keep churn rate low.
So, not only do T-Mobile's new store openings support customer growth, they support average revenue per user growth for the carrier.
Do Verizon and AT&T need to worry?
With the broadest retail footprints in the country, AT&T and Verizon are going to be the biggest losers as T-Mobile enters new markets. Both companies have been bleeding subscribers to T-Mobile for years now.
AT&T is relying on bundle economics to keep customers from leaving. It's offering all unlimited plan customers $25 off a DIRECTV package, and Unlimited Plus customers also get free HBO on any AT&T video service.
Verizon is relying on the strength of its brand and its network, which still regularly ranks atop the four national carriers in independent studies. Verizon may also launch a nationwide video streaming service later this year that it could bundle.
But consumers are cutting the cord more than ever, so it's not clear how much a bundle will help. That said, Verizon is better positioned than AT&T to hold onto its customers as T-Mobile enters new markets. Nonetheless, both companies must remain aggressive, as the competition in the industry remains fierce.
10 stocks we like better than T-Mobile US
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and T-Mobile US wasn't one of them! That's right -- they think these 10 stocks are even better buys.