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T-Mobile winning its game of Uncarrier chicken for now

T-Mobile has an interesting 2015 shaping up. Unknown is how larger rivals will ultimately respond to its relentless promotions.
Written by Larry Dignan, Contributor

T-Mobile has become a disruptive force in the telecom industry with its Uncarrier moves, but it's unclear how long it can win its game of chicken.

As noted by CNET's Roger Cheng, T-Mobile closed out 2014 on a high note with a profit of $101 million on revenue of $8.15 billion, up almost 20 percent from a year ago. The results were well ahead of expectations.

T-Mobile managed to add 2.1 million net customers in the fourth quarter and 8.3 million in 2014 with promotions such as Data Stash, which allows customers to carry over data from month to month. As a result, T-Mobile has captured almost 80 percent of the wireless industry's postpaid growth in the fourth quarter.

In 2015, T-Mobile said it will add 2.2 million to 3.2 million postpaid net customer additions.

To date, a lot of these gains have come at Sprint's expense, but there is evidence that T-Mobile is dinging Verizon and AT&T. Those latter giants, however, aren't panicking. There's a good reason for that: It's unclear whether T-Mobile can afford to keep up its Uncarrier ways.

Part of that calculus may just reflect T-Mobile rivals being cocky. Another part of that equation may just reflect simple math. Data Stash will result in a charge of $100 million to $150 million so T-Mobile can distribute data to customers who sign-up. T-Mobile adds that the charge will reverse in 2015.

Here's the rub for T-Mobile though.

  • The more customers T-Mobile adds, the more it will cost to be Uncarrier.
  • As more customers come to T-Mobile, the wireless outfit will have to invest more in capacity.
  • Sprint has stepped up its promotions and now has a halve your rate plan in place for the foreseeable future.
  • At some point, Verizon and AT&T will respond if churn rates tick up a bit more.

T-Mobile CEO John Legere---ever quotable and bombastic---dismissed such worries on an earnings conference call.

Going into 2015, I think the competitive environment is intense. We are prepared for it. We are thriving on it. And it will continue.

It is about brand and it is about Uncarrier.

I think there is a bit of schizophrenia on the other guys that they will have to sort out.

We need Sprint to help us take a few shots at the big guys and cause a little turn in the industry.

For 2015, T-Mobile appears poised to grow, but the U.S. market is saturated. Should the larger players in the industry ramp up the heat on T-Mobile there will be costs associated with the skirmish. T-Mobile's playbook will likely work for 2015, but beyond that place your bets carefully.

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