At some point, big wireless companies made a decision for you that you should have to wait two years to get a new phone for a fair price. That’s 730 days of waiting. 730 days of watching new phones come out that you can’t have. Or having to live with a cracked screen or an outdated camera. We say two years is just too long to wait. Today, we’re changing all that with the launch of JUMP! Now, customers never have to worry about being stuck with the wrong phone. And yes, it’s really as good as it sounds.
The revolutionary plan from T MOBILE US INC (NYSE:TMUS), which stands for “just upgrade my phone,” is already being copied by other providers, but could be huge for the number four telecom player in the United States. For $10 a month, customers at T MOBILE US INC (NYSE:TMUS) can trade in their phone after six months on the plan. In fact, customers can trade in their phones four times in a 24 month time period. The $10 a month fee is a screaming bargain for customers, considering it also covers insurance for damage and protection, which already costs $8.
To go along with its new Jump program, T MOBILE US INC (NYSE:TMUS) has rolled out 4G LTE, new family plans, and integrated the iPhone into all stores and kiosks. The company is competing strong with its new 4G LTE program. In June, the company spent $308 million to acquire additional spectrum. The company’s 4G routes cover 157 million people and are available in 116 metropolitan markets. Compare that to number three player Sprint Nextel Corporation (NYSE:S) who’s 4G is available in 110 markets and covers 55 million people.
In the first quarter, T MOBILE US INC (NYSE:TMUS) added 579,000 net additions, including 3,000 branded customers. The increase in branded customers was the company’s first in 15 months. The importance in that number is, of course, the difference in average revenue per use. Postpaid branded users have an ARPU of $54.07, compared to prepaid branded users average of $28.25.
Rival telecom leader AT&T Inc. (NYSE:T) is the first out with a full plan to compete with T MOBILE US INC (NYSE:TMUS). The company’s ATT Next program, which will start on July 26, was announced this week. The program is different though, as it requires 12 months worth of monthly fees before a customers can upgrade to a new phone.
ATT Next requires no down payment, no activation fee, no upgrade fee, and no financing fee. The plan, which also tries to go after the value consumer, allows low monthly installments to pay for phones and upgrades. After 12 months on the plan, customers can trade in for a new phone, as they continue to pay monthly payments on the new phone. After 20 months, no further monthly payments are due.
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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