T-Mobile's UnCarrier strategy pays off with 1.1 million new customers

[Shawn Knight]

T-Mobile’s recent Uncarrier strategy seems to have paid off as the wireless provider managed to add 1.1 million customers during the second quarter. It marks the first time that T-Mobile has reported subscriber growth in several years and is also the highest rate of growth among all of the national carriers during the period.

Revenue for the quarter beat Wall Street expectations at $6.23 billion, an increase of 27.5 percent. But even still, T-Mobile reported a loss of $16 million compared to the year ago profit of $207 million. T-Mobile finished the quarter with 44 million customers.

The recent growth can be credited to a number of factors. The carrier finally got around to offering the iPhone on their network but perhaps it was a series of structural changes that saw the company benefit the most. In March, T-Mobile debuted a contract-free $50 unlimited talk, text plan with tethering.

Last month, the carrier launched Simple Choice family plans with no credit check required as well as its Jump upgrade program. With Jump, customers can now upgrade their handset twice a year at the same subsidized price as a new customer without having to wait two years.

The latter move prompted AT&T and Verizon to launch similar upgrade programs known as Next and Edge, respectively. Despite the fact that these plans all look attractive at first glance, things become a bit more clear once you do the math and realize they little more than a glorified phone rental agreement.

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https://www.techspot.com/news/53552-t-mobiles-uncarrier-strategy-pays-off-with-11-million-new-customers.html

 

[psycros]

What's wrong with renting a phone if its the same cost as a subsidy? Besides, its not really a rental anyway - they can't repossess the thing. I'm honestly surprised they don't already lease devices. Their a fairly big-ticket item: expensive, become obsolete relatively quickly and it lets regular people stay on the cutting edge. However, we all know that "Jump" isn't what's put T-Mo back in the game: its the unlimited plan that's within spitting distance of what Europeans pay for the same service. There's no excuse for the level of profiteering American carriers get away with. Maybe now those who supported the AT&T merger out of ignorance can understand why we fought it so hard.

 

[howzz1854]

Well... duhh... give customers what they want and you'll make money.

 

[MilwaukeeMike]

I'm one of the new T-mobile customers, and I signed up because it's cheaper. That's it. I don't plan on signing up for Jump. I deal with their smaller coverage when I leave a city, but for saving $40/month, I'll take it.

realize they little more than a glorified phone rental agreement.

If by 'glorified rental agreement' you mean 'payment plan at 0% interest.' You don't have to give it back, so it's not a lease. You don't end up paying more overall than the cost of the item, so it's not a 'rent-to-own' plan. You buy the phone and make payments on it. The JUMP/Next/Edge plans just give you the option of selling it back when YOU want, not when some rental agreement is up.

 

[Guest]

This is quite good, someone needed to step up and offer more choices. I'm glad T-Mobile did and is benefiting from doing so. Hopefully this will put pressure on the other carriers to adopt more of the same policies.

 

[howzz1854]

I'm one of the new T-mobile customers, and I signed up because it's cheaper. That's it. I don't plan on signing up for Jump. I deal with their smaller coverage when I leave a city, but for saving $40/month, I'll take it.

realize they little more than a glorified phone rental agreement.

If by 'glorified rental agreement' you mean 'payment plan at 0% interest.' You don't have to give it back, so it's not a lease. You don't end up paying more overall than the cost of the item, so it's not a 'rent-to-own' plan. You buy the phone and make payments on it. The JUMP/Next/Edge plans just give you the option of selling it back when YOU want, not when some rental agreement is up.

actually what T-mobile did is smart financing. although it might seem like 0% interest, the $10 a month itself is intrinsically an interest, and the monthly phone payment is the loan payment you pay out each month. and frankly that's a pretty big fat interest. at $10 a month based on a monthly equipment payment of $20. and if you don't give back the phone for a new one by the time the equipment is paid off, you're just throwing your money away by giving them $10 a month for nothing. no wonder the rest of the three carriers are jumping on this model. except with ATT, Verizon, and soon Sprint, you're paying a high subsidized rate plan on top of the interest. legal racketeering at its best. so don't do it.

I switched to T-mobil myself as well due to the low price unlimited talk + text + data. but don't plan on signing up for any jump program. I'll ride my phone until the wheels fall off.

 

[MilwaukeeMike]

actually what T-mobile did is smart financing. although it might seem like 0% interest, the $10 a month itself is intrinsically an interest, and the monthly phone payment is the loan payment you pay out each month. and frankly that's a pretty big fat interest.

I wouldn't call it interest because you don't have to pay it. The $10/month is insurance (which is $4 to $8 by itself) + a monthly fee to be allowed to buy another phone on payments. If you like you can buy the phone up front and still pay $10/month for JUMP so you can buy another one later, but if you pay for the whole phone yourself you get to keep it instead of trading it in. The $10 is really just a fee that allows you to use their payment plan system twice a year.

But think about why they made it a monthly fee instead of a single fee when you trade in your phone. Because if it's a monthly fee, it'll encourage people to use it as soon as a new phone is released. That's also why they say 'twice a year' not 'every 6 months' You could get two new phones back to back if you wanted, but then have to wait a whole year for the next one. The faster you trade your old phone in, the more value it has when you trade it in, and the more money t-mobile can get reselling it.

it's a pretty slick plan, and I'll bet plenty of people sign up for it. It's hard to say whether it'll make money on it's own, or whether it'll just help get more customers.

 

[howzz1854]

I might have to read up on it again. but I remember the JUMP fee is $10 which you have to enroll (required) in order to qualify you for an upgrade every 6 months. in which case if it's a fee you're required to pay, it's an interest. otherwise without it, paying the equipment fee of $20 every month from month to month and upgrade every six month would be a good deal, in THAT case you're not paying an interest, you're just paying off the face value of the phone indefinitely.

it really is a FAT 50% interest. based on two years of equipment payment of $20/mon, that's $480 in two years per phone plus $240 of interest, that's a total of $720 dollars every two years for a phone. or if you divide that by every six month, that's $120 plus $60 of interest, at a total of $180 plus the remaining value of the face value of the phone should you stop using JUMP. I don't know about you, but smart phones don't depreciate anywhere near $180 every 6 month. they're essentially charging you an interest of $60 every 6 months on top of the depreciation rate of the asset. so theoretically they can salvage the asset and still make money on the interest. it's financing at its best, that's intrinsically nothing new. (face value + interest x years with depreciation). and the longer you stay with Jump, the amount racks up . I should buy some t-mobile stocks.

 

[Guest]

actually what T-mobile did is smart financing. although it might seem like 0% interest, the $10 a month itself is intrinsically an interest, and the monthly phone payment is the loan payment you pay out each month. and frankly that's a pretty big fat interest. at $10 a month based on a monthly equipment payment of $20. and if you don't give back the phone for a new one by the time the equipment is paid off, you're just throwing your money away by giving them $10 a month for nothing. no wonder the rest of the three carriers are jumping on this model. except with ATT, Verizon, and soon Sprint, you're paying a high subsidized rate plan on top of the interest. legal racketeering at its best. so don't do it.

I don't think you understand the policy. T-mobile is not getting interest on the phone. You pay $0-$200(depending on credit) as a down payment, then you make payments to pay off the phone. If you have payed $300 so far for a $600 phone and you decide to switch providers, You don't lose that $300. You just have to pay the remaining $300. It really is just a 0% interest loan. They are still making a profit on the final cost of the phone, but not in interest.

Now for the people who think they are saving money. Please pay attention. This service may or may not be for you. If you love getting the latest and greatest phone then you are not getting a cheaper deal. The service itself may be cheaper, but you will constantly be paying the $15-$25 a month extra +down payment for your new phones. If you are like me, and don't really care about the next hot item on the market, then you probly WILL save money. EX: I had 2 lines on my service with all the extras. Before the new plans I was spending the same amount of money for 2 new phones and the service. But now, I have no monthly payments for phones and I save money. If I add 2 new phones(not including down payment) the cost is the same as it was before.

The difference is that I could add newer phones with an "upgrade" every so often and my bill would not change. Now it will. And I might be subject to a down payment. Previous Verizon and ATT users may save some money, but you are sacrificing service reliability for that privilege.

 

[howzz1854]

actually what T-mobile did is smart financing. although it might seem like 0% interest, the $10 a month itself is intrinsically an interest, and the monthly phone payment is the loan payment you pay out each month. and frankly that's a pretty big fat interest. at $10 a month based on a monthly equipment payment of $20. and if you don't give back the phone for a new one by the time the equipment is paid off, you're just throwing your money away by giving them $10 a month for nothing. no wonder the rest of the three carriers are jumping on this model. except with ATT, Verizon, and soon Sprint, you're paying a high subsidized rate plan on top of the interest. legal racketeering at its best. so don't do it.

I don't think you understand the policy. T-mobile is not getting interest on the phone. You pay $0-$200(depending on credit) as a down payment, then you make payments to pay off the phone. If you have payed $300 so far for a $600 phone and you decide to switch providers, You don't lose that $300. You just have to pay the remaining $300. It really is just a 0% interest loan. They are still making a profit on the final cost of the phone, but not in interest.

Now for the people who think they are saving money. Please pay attention. This service may or may not be for you. If you love getting the latest and greatest phone then you are not getting a cheaper deal. The service itself may be cheaper, but you will constantly be paying the $15-$25 a month extra +down payment for your new phones. If you are like me, and don't really care about the next hot item on the market, then you probly WILL save money. EX: I had 2 lines on my service with all the extras. Before the new plans I was spending the same amount of money for 2 new phones and the service. But now, I have no monthly payments for phones and I save money. If I add 2 new phones(not including down payment) the cost is the same as it was before.

The difference is that I could add newer phones with an "upgrade" every so often and my bill would not change. Now it will. And I might be subject to a down payment. Previous Verizon and ATT users may save some money, but you are sacrificing service reliability for that privilege.

you're not understanding me. I got that first part, and that's fine. but that's not what I was talking about. if all you're paying is the down payment + monthly equipment $20, yes there is no interest like I said. but if you want the JUMP program (upgrade every 6 months), you have to pay additional $10 a month on top. THAT $10 itself in the financing world is called interest. doesn't matter how you spin it in marketing. T-mobile is basically charging you an interest on top of the depreciation rate of the phone so they can re-sell the phone and also make an interest.

if you're just paying for a phone with initial down payment, plus the monthly $20 fee every month for two years like you and I both are doing, then yes everything is peachy and no interest. but when you start using JUMP and paying them $10 bucks a moth that's when the game changes in their favor. trust me, I came from finance background, it's what I used to do.

 

[Fbarnett]

Well... duhh... give customers what they want and you'll make money.

It says they lost money
Revenue for the quarter beat Wall Street expectations at $6.23 billion, an increase of 27.5 percent. But even still, T-Mobile reported a loss of $16 million compared to the year ago profit of $207 million. T-Mobile finished the quarter with 44 million customers.

 

[howzz1854]

Well... duhh... give customers what they want and you'll make money.

It says they lost money
Revenue for the quarter beat Wall Street expectations at $6.23 billion, an increase of 27.5 percent. But even still, T-Mobile reported a loss of $16 million compared to the year ago profit of $207 million. T-Mobile finished the quarter with 44 million customers.

if you look at the 2Q income statement published on SEC filing, on 3rd page and 5th page. their EBITDA vs Net Income shows that they paid off a large sum of interest, and spent a whole lot on purchasing equipment over the last 6 months. which reflects their balance sheet on the 4th page, that their long term liability went up by about $5 million, and their total assets went up by about $10 Million. basically in plain english, they spent a whole chunk of money last 6 months beefing up their balance sheet and investing in their long term assets. it's hardly a bad thing. if anything, it shows the company is re-investing.

 

[Guest]

That Nose..

 

[RenGood08]

I like the look of the guy on the right. LOL!