Why T-Mobile Believes Unlimited Strategy Is Sustainable

T-Mobile’s (TMUS) current marketing drive is its Un-Carrier initiative, which provides simple pricing plans to its subscribers. It launched its T-Mobile One plan, an unlimited offering, in September 2016 as part of its Un-Carrier initiative. T-Mobile One simplifies T-Mobile’s offering by eliminating data plans. The plan is driving customer additions.

At the Citi European & Emerging Markets Telecoms Conference on March 21, 2017, Neville Ray, T-Mobile’s chief technology officer, spoke about T-Mobile’s unlimited strategy and whether the growth of its subscriber base with unlimited data is sustainable under the current capital budget. Ray said, “On unlimited in terms of sustainability, very confident. I think the Binge On program that we put in place, T-Mobile One now, customers are enjoying optimized video and they are very, very happy with the product.”

He added, “We believe we have the best network to support it and we have the highest-performing network to boot to support it today.”

In January 2017, T-Mobile launched Un-Carrier Next. The advertised price of this unlimited data plan includes all additional fees and taxes. So four lines with the T-Mobile One plan at $40 per line would equal a total bill of $160.

T-Mobile’s postpaid subscriber growth has significantly outpaced its peers in the saturated US wireless space. Postpaid subscribers rose ~8.6% YoY (year-over-year) to reach ~34.4 million at the end of 4Q16.

Sprint’s (S) postpaid customers rose ~2.6% YoY to reach ~31.7 million in the same quarter. Verizon’s (VZ) postpaid subscribers rose ~2.1% YoY to reach ~108.8 million at the end of 4Q16. AT&T’s (T) postpaid subscribers in its domestic operations rose ~0.90% YoY to reach ~77.8 million in 4Q16.