T-Mobile U.S. Inc.
) has decided to strike back at Sprint's new offering with a
competitive data plan, which could lead to another round of price
war within the U.S. wireless industry.
This sheds light on the competitive nature of the U.S. wireless
market as it was only some time ago that Sprint Corp. (
) and T-Mobile were contemplating a merger.
T-Mobile has updated its existing Simple Starter plan by
quadrupling the data capacity. Along with unlimited voice and text,
the new plan will offer 2GB of LTE data for $45, at only $5 more
than the current one. The new plan will be available from Sep 3,
After the 2GB threshold is exhausted, the service will get
suspended and subscribers need to buy either a single day 500 MB
data pass for $5 or choose a week-long option, which provides 1GB
data for $10. However, the new plan does not include international
service package and provides only 50 MB of data while roaming.
After the proposed merger between T-Mobile and Sprint fell apart
owing to regulatory hurdles, the latter introduced its new
unlimited Talk, Text and Data plan for $60 per month for new and
existing customers. This was $20 cheaper compared to T-Mobile's
unlimited data plan. However, Sprint's plan does not include the
cost of the phone.
T-Mobile's prompt response to Sprint's action underlines the
former's desperate efforts to win subscribers over from its rivals.
Notably, T-Mobile's plan is cheaper than Verizon Communications
) 2 GB offering, which comes at $50 per month with an Edge handset
upgrade plan. Even Verizon's overage fees start at $15 for 1GB.
Rival AT&T Inc.'s (
) similar plan costs $20 more. Moreover, customers either need to
bring their own device or finance one through its Next handset
Cut-throat competition within the sector had led T-Mobile to
start its Un-Carrier 4.0 initiative, which pays off the early
termination fees for customers switching over to the company from
three other traditional carriers.
The rivalry has once again come alive as T-Mobile has vowed to
provide a one-year LTE subscription, free of cost, to subscribers
who can successfully convert non-T-Mobile users to the carrier,
starting next week. Notwithstanding, the new subscribers will also
be able to enjoy the free subscription.
T-Mobile boasts a super-fast LTE network and has successfully
expanded its network coverage to 233 million people. We believe
such low-cost plans will lure new subscribers to T-Mobile,
particularly those who are cost-sensitive.
However, customers will benefit the most from this price
rivalry, which could pull down wireless prices even further.
However, we remain on the sidelines to gauge whether these efforts
on T-Mobile's part will be strong enough to challenge Verizon and
AT&T's dominance in the telecom space.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
AT&T INC (T): Free Stock Analysis Report
SPRINT CORP (S): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
T-MOBILE US INC (TMUS): Free Stock Analysis
To read this article on Zacks.com click here.