T-Mobile Simple Choice plan
In the earlier parts of this series, we saw that T-Mobile (TMUS) has been witnessing solid postpaid subscriber growth compared to the other large US wireless carriers. Its subscriber growth momentum is expected to continue in 2Q15.
In this part of the series, we’ll look at a key T-Mobile plan called Simple Choice. The Simple Choice plan has positively contributed to T-Mobile’s solid postpaid subscriber growth. The company launched this unlimited, no-contract rate plan in March 2013 and tapped into the high demand for such plans in the United States.
The popularity of the Simple Choice plan grew significantly in 1Q15. As you can see in the above graph, the penetration of T-Mobile’s Simple Choice plan in its postpaid subscribers increased from ~75% in 1Q14 to ~92% in 1Q15.
At current penetration levels, the plan predominantly represents the company’s postpaid base. According to T-Mobile, the penetration of Simple Choice plans reached its limit at the end of 1Q15.
Offerings similar to Simple Choice
Among the top four US wireless carriers, only T-Mobile and Sprint (S) offer unlimited data plans. Verizon (VZ) and AT&T (T) don’t offer such plans. However, both these carriers offer plans with high data usage. Verizon offers More Everything, and AT&T offers Mobile Share Value. These plans are especially useful for families and individuals with multiple devices. They cater to the high data demand of smartphone and tablet users who use devices such as Apple (AAPL) iPhones and iPads.
Instead of investing in T-Mobile stock, you may take a diversified exposure to the company by investing in the iShares U.S. Telecommunications ETF (IYZ). IYZ held ~5.6% in T-Mobile as of June 30, 2015. You may take an extremely diversified exposure to T-Mobile by investing in the iShares Russell 1000 Value ETF (IWD). The ETF held ~0.1% in T-Mobile at the end of June.