The fourth-largest carrier in the U.S.,
T-Mobile US, Inc.
) recently decided to hike the installment payment rates of
) iPhone 5 by $50, after selling the device for a reduced rate
Unavailability of Apple Inc.'s iPhones in its smartphone
portfolio coupled with the lack of 4GLTE spectrum has led to a
continuous loss of subscribers for T-Mobile USA in the last four
years. Moreover, the U.S. telecom market is hugely dominated by
top two carriers -
Verizon Communication Inc.
), which has resulted in a heavy decline of customers for the
In order to improve its present scenario, T-Mobile USA started
selling contract-less iPhone 5, iPhone 4S and iPhone 4 for $580,
$550 and $375, respectively with a two-year installment
During the first month, it is believed that T-Mobile US sold
nearly 500,000 iPhones, hence its new strategy worked wonders for
the company. However, from this month, the company plans to raise
the down payment price of the iPhone 5 to $100 and the remaining
balance is to be paid in installments ($20 for the next two
Hence, we believe that such a move by T-Mobile US will reduce
pressure on its current cash position and will also drive
subscriber growth, going forward.
Recently, T-Mobile US completed its merger with MetroPCS
Communications, Inc., which will solve most of its problems. The
combined entity will gain more spectrums, thereby deploying 4GLTE
technology across its footprints.
All these strategies laid down by T-Mobile US is already
showing signs of improvement as in the recently concluded quarter
the company gained 3,000 subscribers as compared with a loss of
261,000 subscribers in the prior-year quarter.
Therefore, we believe that T-Mobile US will become a strong
player and will intensify competition going forward.
T-Mobile US currently carries a Zacks Rank #3 (Hold).
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