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T-Mobile is set to cause a whole new headache – report

Legere 10_07_2015

T-Mobile is being is mischievous self once again as rumours kick-off about the self-proclaimed ‘Uncarrier’ taking a stab at disrupting the subsidized handset model.

According to Android Authority, T-Mobile will launch a service that reduces the price of top-tier phones, addressing one of the biggest bug-bears of the cash-conscious consumer. Details are a bit light at the moment, but it won’t be a contract deal, but will offer a lifetime warranty and insurance. The launch will come later in the year, which falls into line with the quarterly earnings call where CEO John Legere promised another Uncarrier offer in the second half of 2017.

Should this report prove to be true, it will test the resilience of other telcos, the majority of which appear desperate to get away from the subsidized-handset model in the pursuit of more attractive profit margins. A pessimist looking at the US landscape might comment Legere is making such moves just to be a nuisance, seemingly taking pleasure in nothing more than causing headaches elsewhere.

That said, if you have a look at T-Mobile’s quarterly earnings, the team are raking in the cash. Legere is doing something right somewhere, even if it is a bit of a irritation to everyone else.

It should hardly come as a surprise the magenta army is going against industry trends, as its already proved swimming against the tide can be a productive move. As everyone else was moving away from unlimited data packages, seemingly fearing a race to the bottom, T-Mobile’s Uncarrier strategy took them to the front of the business and kicked off a continuous stream of customers exiting the established players. It wasn’t long before the likes of AT&T and Verizon decided unlimited data packages were a good idea, but the damage was already done.

The new plans are unconfirmed for the moment, though it does make sense. It would appear the T-Mobile strategy is to build a big enough customer base and then monetize later. The telco is making money now, but it isn’t necessarily taking the most profit-efficient route. Momentum is with T-Mobile in terms of collecting post-paid customers; soon enough the economy of scale will allow the team to make some serious cash.


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