Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
T-Mobile US’ rebirth following AT&T’s failed acquisition attempt back in 2011 looks to have hit a significant milepost as the carrier this week announced first-quarter operating results indicating T-Mobile US is now the domestic market’s No. 3 operator.
Now, these are just numbers and should not really have any impact on anything beyond ego-stroking of some individuals inside T-Mobile US and perhaps continued soul-searching inside of Sprint. (Plus, with Sprint yet to have released its latest quarterly numbers, perhaps the battle is not truly over.) But, it does at least open the discussion on what’s next for T-Mobile US.
Since nearly its inception, T-Mobile US – and its previous iteration as VoiceStream Wireless – have been the market’s smallest nationwide operator. This position has allowed the carrier to always position itself as the disruptor in the market, which it has taken advantage of over the past several years through its “Un-carrier” marketing initiatives.
Backed by a rambunctious executive team that seems powered by a mix of Pop Rocks and Red Bull, T-Mobile US has pushed the angle of being the cool uncle compared with the stodgy parent image of Verizon Wireless and AT&T Mobility. (Sprint? Well, let’s just consider Sprint the “lost” sibling still trying to find its way in life.)
But, on to the question at hand: What’s next for T-Mobile US?
Well, while it may now be the No. 3 carrier in terms of connections on its network, it’s nearly half the size of the next largest operator so chances of it surpassing another rival is probably off the list – for now. (Unless of course we can rekindle some of those Sprint/T-Mobile US merger ideas. Perhaps this time with T-Mobile US buying Sprint?)
Looking at customer growth, T-Mobile US has done an amazing job over the past two years in poaching customers from rivals. More importantly, T-Mobile US has done most of that poaching of higher-valued smartphone customers who tend to produce more money and churn less often. Most would consider those two attributes a win-win.
However, this method can’t be relied on forever as at least some of those rivals have been more aggressive themselves in countering some of T-Mobile US’ marketing efforts. Sure, Verizon Wireless on the outside doesn’t seemed bothered by customers switching allegiances – especially those of a “lower value” – but word is the carrier is looking to ramp up marketing efforts in the coming months to counter the exodus of midtier customers. Plus, Sprint has gotta at some point get its mess straightened out? Right?
But, until those stars align, I suspect T-Mobile US will continue to nibble away at the customer bases of its larger – and now smaller – nationwide rivals.
Other growth areas T-Mobile US looks poised to benefit from are tablets and mobile virtual network operators.
Tablets have become the growth engine of choice of Verizon Wireless and AT&T Mobility, with tablets leading the way for both carriers over recent quarters. Their respective shared data plans appear custom-tailored for these devices as customers can add a tablet device tapping into an already bought bucket of data for a nominal fee.
T-Mobile US, on the other hand, has yet to really see much benefit from the tablet market despite specific “Un-carrier” initiatives targeting that market. It would appear that customers can’t quite get their heads around what T-Mobile US is trying to do in the tablet space, which I suspect might be the focus of some future marketing initiatives.
If T-Mobile US can somehow unlock the marketing magic behind tablets, the growth opportunities there seem substantial.
MVNOs also look set to be a stronger growth segment for T-Mobile US, especially following the recent announcement from Google on its Project Fi offering. While that service will tap into both T-Mobile US and Sprint, if Google puts some marketing might behind the program it could prove a compelling “connection” lift for T-Mobile US.
In addition to Google, T-Mobile US has managed to score a number of other potentially significant MVNO deals that could continue providing a connection boost for the carrier. More importantly, these connections come at very little cost to T-Mobile US, which leads to the small issue of finances.
T-Mobile US could look to tap into its solidified position with consumers to begin extracting a bit more money from them on a regular basis. While Verizon Wireless and AT&T Mobility continue to throw off billions of dollars in profits for their parent companies, T-Mobile US is still operating at just around break-even for its investors.
Sure, those investors have been riding the wave of T-Mobile US’ stock price over the past several months (up around 40% so far this year), but the carrier’s stock price today is on par with where it was one year ago, and at some point investors are probably going to want to see some profits in order to continue justifying the valuation.
T-Mobile US appears able to keep those questions at bay for a bit longer as it can continue pointing to its role as a disruptor in the market, which seems to also include a bit more slack from the bean counters. But, as T-Mobile US continues to grow, it may have to switch its focus from being the cool uncle who shows up to family reunions wearing a T-shirt under a sports jacket.
Growing up is always a difficult adjustment, but T-Mobile US’ success could force the carrier to face that adjustment sooner rather than later.
OK, enough of that.
Here’s an extra!
– Tip to anyone trying to get my attention via e-mail, follow what communications firm Unify did with the subject line tied to information on a new report looking at the importance of collaboration technology for U.K. employees:
Subject line: “Stop, collaborate and listen” – what workers want
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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