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Putting T-Mobile’s Television Move in Perspective

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Dec. 4 2020, Updated 10:42 a.m. ET

Disrupting the television market

T-Mobile (TMUS), the US (SPY) wireless operator that nearly merged with its competitor Sprint (S) in 2017, is venturing into the television service business. T-Mobile announced that it was gearing up to shake up the television market. T-Mobile has gained distinction for its disruptive tactics such as steep service discounts, contributing to its ability to grow its wireless subscriber base rapidly.

In the television move, T-Mobile is venturing into territory that has become familiar with wireless carriers amid a search for new revenue opportunities as growth in the core wireless market has slowed.

AT&T (T), a leading US pay-TV provider, augmented its video offering with an online video service called DIRECTV NOW. Verizon (VZ), which offers a mobile video service called Go90, is expected to launch a larger Internet video service later this year.

Although T-Mobile didn’t disclose everything about its upcoming television service, it dropped enough hints to suggest that it would involve an Internet-based television service akin to AT&T’s DIRECTV NOW, Dish Network’s (DISH) Sling TV, or Sony’s (SNE) PlayStation Vue.

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Capitalizing on favorable brand ratings

T-Mobile’s announcement of an upcoming television service could capitalize on its favorable brand rating, nationwide retail presence, and a strong sales team to generate more revenues by expanding its service offering.

T-Mobile’s revenues grew about 8.0% YoY (year-over-year) to over $10.0 billion in 3Q17, outpacing Verizon’s 2.5% revenue growth. AT&T and Sprint recorded revenue declines of more than 3.0% YoY.

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