T MOBILE US INC (TMUS) Could Reward Shareholders With a “Jump” Over Competition

In the first quarter, AT&T Inc. (NYSE:T) saw revenue slide 1.5% to $31.4 billion. The company did see 1.2 million new smartphone subscriptions and now has 88% of postpaid customers on a smartphone plan. The company collects the majority of its revenue (53%) from its wireless segment. Average revenue per user was up 18% in the first quarter. A successful launch of ATT Next could help the company in its continued dominance of the United States with Verizon. The plan could also increase its average revenue per user with higher monthly fees.

Verizon Communications Inc. (NYSE:VZ) has announced a similar plan called Verizon Edge. The plan will cost $10 a month and allow upgrades two times a year. This plan, which is very similar to T-Mobile’s, is rumored to be released on August 25. Verizon’s plan also drops the need for a service contract agreement. This leaves AT&T Inc. (NYSE:T) as the only new upgrade plan with a contract.

However, Verizon Communications Inc. (NYSE:VZ) does have some requirements to be on the Verizon Edge plan: customers pay 24 monthly installments and users must be on a higher end shared data plan. This last requirement should boost Verizon’s average revenue per user. Customers must also pay 50% of a phone’s price before upgrading to a new one.

A potential winner to watch from Verizon Communications Inc. (NYSE:VZ)’s plan is Apple Inc. (NASDAQ:AAPL). In the most recent second quarter, the iPhone made up 51% of all of Verizon’s smartphone sales. With Apple Inc. (NASDAQ:AAPL)’s new phone releases yearly, many customers may choose the Verizon Edge plan just so they can get the latest iPhone. This means more units sold for a company like Apple Inc. (NASDAQ:AAPL).

T MOBILE US INC (NYSE:TMUS)’s goal is to be the United States wireless industry value leader. With the closing of the Metro PCS deal in April, T-Mobile gained millions of customers that already expect value. With new phone offerings and cheap monthly plans, T-Mobile is likely to take away market share from the leaders. I also like what AT&T did by wasting no time to introduce a new plan. Both telecom companies are buys from this news going forward.

The article T-Mobile US (NYSE:TMUS) Could Reward Shareholders With a “Jump” Over Competition originally appeared on Fool.com and is written by Chris Katje.

Chris Katje has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Chris is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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