GoSmart, the prepaid arm of T-Mobile U.S. (TMUS - Analyst Report) has joined forces with Facebook Inc. (FB - Analyst Report) to offer unlimited access of the popular social media site to its customers, including those who don’t have data on their plan. T-Mobile is the first operator in the U.S. to offer free FB access to its customers.
From Jan 2014 onward, GoSmart customers simply have to log on from a browser or from their Facebook application embedded in their phones. This free access to Facebook will not eat up data, thus allowing further scope for browsing. While the terms of the deals remained undisclosed, T-Mobile might share its advertisement cost with Facebook.
Facebook has gained tremendous ground in the last few years and is undoubtedly the most popular social media site in the world, with close to 1.2 billion active monthly users. Nearly half of these users use their mobiles to stay connected to Facebook and share their photos and videos. This tie-up with T-Mobile is part of the social media giant’s effort to make the world more open and connected. In this context, Facebook has already struck similar deals with operators in emerging countries.
Prepaid service is quickly becoming a competitive segment within the U.S. telecom sector as top shots like AT&T Inc. (T - Analyst Report) is looking for expansion within the space. The no-frill nature of the prepaid service is allowing carriers to tap new customers. GoSmart is a low cost prepaid service with monthly plans starting at $25 per month with unlimited call options. The company attracted 24,000 GoSmart customers in the third quarter of 2013.
We believe that offering free Facebook access is a strategic move by T-Mobile to bring in new customers, who were previously not using data products and have been induced to access the Internet from their mobiles. This in turn will increase the prospect of T-Mobile’s prepaid service.
T-Mobile, which operates with Verizon Communications Inc. (VZ - Analyst Report) currently carries a Zacks Rank #3 (Hold).