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T-Mobile Drives Subscriber Growth

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T-Mobile USA – the fourth-largest telecom carrier in the U.S. and also a business arm of Germany's Deutsche Telekom AG – reported an improvement in subscriber growth in the ongoing financial quarter.

T-Mobile USA gained 3,000 subscribers in the first quarter of 2013 as compared with a loss of 261,000 subscribers in the prior-year quarter.

Unavailability of Apple Inc.’s (AAPL - Free Report) iPhones in its smartphone portfolio coupled with the lack of 4GLTE spectrum has led to a continuous loss of subscribers for T-Mobile USA in the last four years. Moreover, the U.S. telecom market is hugely dominated by top two carriers – Verizon Communication Inc. (VZ - Free Report) and AT&T, Inc. (T - Free Report) , which has resulted in a heavy decline of customers for the company.

In order to improve its present scenario, T-Mobile USA has taken some major steps. Firstly, the company will launch contract-less iPhone 5, iPhone 4S and iPhone 4 for $580, $550 and $375, respectively with a two-year installment option.

Secondly, T-Mobile USA plans to merge with the fifth-largest carrier, MetroPCS Communications, Inc. . The company has already cleared all the regulatory hurdles except shareholders’ approval, which will be held on Apr 12. So, completion of the merger will benefit T-Mobile to gain more spectrums and will enable deployment of 4GLTE technology across its footprints, thereby narrowing the gap between T-Mobile and the other telecom players in the U.S. market in terms of 4GLTE deployments.

Finally, T-Mobile also launched the UnCarrier plan starting at $50 per month with unlimited calls and 500MB free data, which is optional for the smartphone buyers, hence offering more flexibility to smartphone users. Moreover, it will also help the company to target the low-end market with such attractive plans

Hence, we believe that implementation of these strategies at initial levels has resulted in such a massive improvement in subscriber growth. Going forward, we expect T-Mobile USA to maintain this growth momentum as the company prepares to launch its much-awaited iPhones.

Currently, Verizon Communication, AT&T and MetroPCS carries a Zacks Rank #3 (Hold) while Apple carries a Zacks Rank #4 (Sell).

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