AT&T Makes a Preemptive Strike Against T-Mobile

AT&T is shelling out up to $450 to each T-Mobile customer who switches away from the company.

Jan 3, 2014 at 9:30PM

The new year is off to a truly interesting start in the telecom sector. AT&T (NYSE:T) announced today that it's offering T-Mobile (NASDAQ:TMUS) customers up to $250 in AT&T credit on a smartphone trade-in, as well as a $200 credit toward their new monthly service plan,  if they switch from T-Mobile. That's a total of $450 per line for T-Mobile customers who switch to AT&T.

This latest move will allow T-Mobile customers to use the $250 for products and services from AT&T, including new smartphones. T-Mobile customers can also keep their existing devices and still receive that $200 toward their service plan if they switch.

The new offer comes on the heels of a rumor that T-Mobile will pay up to $350 in early termination fees for customers of other carriers who switch to T-Mobile. T-Mobile is expected to announce this new incentive, or something else, at its next "uncarrier" event on Jan. 8 at the Consumer Electronics Show in Las Vegas.

The No. 4 U.S. carrier has been in battling AT&T and other rivals to lure customers to its new up-front pricing plans. So far the company's strategy has been paying off, but it still has a long ways to go against the competition. T-Mobile added 1.3 million net postpaid branded subscribers over the past two quarters, but that's compared to AT&T adding 1.2 million net subscribers in this past quarter alone.

T-Mobile has been very vocal in its fight against AT&T, with the company tweeting just a few days ago that one resolution in 2014 was to "give AT&T a break... or not."

Fuel to the fire
Just last month AT&T started following in T-Mobile's footsteps by reducing monthly charges for some no-contract customers and new customers who bring their own devices to the company's network. T-Mobile's low-cost monthly plans and no-contract service have pushed AT&T to lower its monthly plans for users who aren't receiving a subsidy for their smartphones.

T-Mobile may face a merger or acquisition from rival Sprint later this year, so the company has every incentive to beef up its subscriber base before that happens. DISH Network is also very interested in T-Mobile, but whether any merger or acquisition takes place, it's likely the company will continue making every effort to lure new customers. In 2013, T-Mobile launched free international roaming on its network and free tablet data for life to bring in new customers.

AT&T's new incentive plan for T-Mobile customers is a temporary solution, and it shows that the smaller carrier is getting under the company's skin. Investors on both sides should watch for how many T-Mobile customers AT&T snags during this temporary promotion. With T-Mobile expected to make a big announcement next week, it seems the carrier wars of 2014 are only beginning.

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Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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