How T-Mobile Is Looking To Keep Its Postpaid Phone Momentum Going

by Trefis Team
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T-Mobile (NASDAQ:TMUS) has led the wireless industry in terms of postpaid phone subscriber additions for every quarter over the last four years, on account of its contract-free plans and clever “Uncarrier” promotions. During Q2 2018, the company added 686k postpaid phone subscribers, marking an increase of about 29% on a year-over-year basis, and the company expects to add 3 million to 3.6 million branded postpaid net customers over this year. In this note, we take a look at some of the factors that could drive T-Mobile’s postpaid phone subscriber growth in the near term.

Our interactive dashboard on what’s driving T-Mobile’s valuation details our expectations for the company through the rest of the year and the factors driving our valuation estimate. You can modify any of our forecasts or key drivers to see the impact that changes would have on the company’s value.

Network Performance And Coverage Improvements

T-Mobile has been focusing on improving its network from both a coverage and performance perspective. The company has a sizable amount of low band spectrum, particularly in the 600 MHz spectrum bands, which should allow it to improve its presence in rural and suburban areas in a relatively capital-efficient manner. As of the company’s Q2 conference call, it indicated that it had low band spectrum deployed to 289 million POPs (it covers a total of 323 POPs with LTE currently) while noting that its 600 megahertz spectrum is active in 992 cities and towns in 33 states. Separately, the company also intends to roll out its 5G network across 30 cities, including New York, LA, Dallas and Las Vegas, with nationwide coverage expected by 2020.

Expanding Retail Presence

T-Mobile has also been expanding its retail presence at a rapid clip. While the company doesn’t regularly disclose its store count, it opened about 1,500 new T-Mobile stores and 1,300 MetroPCS stores last year, with a total of 16,400 retail locations at the end of the year. This should help to aid the carrier’s subscriber growth, particularly in suburban and rural areas, where it is likely to face less competition compared to its urban stores. T-Mobile is projected to overtake AT&T in terms of the total number of retail stores it operates across the country, despite having just about half as many wireless subscribers (related: Why T-Mobile Is Aggressively Expanding Its Retail Footprint).

Customer Service Overhaul Could Bring In More High-Value Customers 

Earlier this month, T-Mobile noted that it would be overhauling its customer service operations, giving customers a dedicated set of customer care representatives who offer quick phone support, without having to go through robotic assistance and push-button menus. While this might be a relatively costly upgrade for the company, it could prove key to bolstering its pricing power, as poor customer support has for long been a long been a pain point for customers in the wireless industry. This could also help the company win over higher value customers.

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