T-Mobile Takes the Fight to AT&T and Verizon Yet Again

Let's take a look at how T-Mobile is taking the fight to the likes of U.S. telecom incumbents AT&T and Verizon.

Jan 12, 2014 at 10:00AM

Follow @andrewtonner

2013 was a pivotal year for telecom comeback kid T-Mobile (NASDAQ:TMUS) and the larger U.S. telecom market as a whole.

Larger incumbents like AT&T (NYSE:T) and Verizon Communications executed deals aimed at furthering their dominance of the U.S. telecom market, while Sprint orchestrated a number of deals aimed at completing its multiyear turnaround.

However, for my money, the most important storyline affecting the U.S. telecom market last year was the resurgence of once-outcast T-Mobile. In many ways, T-Mobile has been the primary antagonist toward the telecom establishment's big three: AT&T, Verizon, and Sprint.

As part of its efforts, it has challenged and upended many of the norms the likes of AT&T have held so near and dear. And if a recent announcement from T-Mobile proves true, names like AT&T and Sprint should be very concerned.

T Mobile Logo

Source: T-Mobile.

I'm baaaack
Earlier this week, T-Mobile reported its preliminary fourth-quarter results, and as you might expect, they proved quite impressive indeed.

The report marked the third consecutive quarter in which T-Mobile added more than one million net subscribers, bringing T-Mobile's total net subscriber gain for all of 2013 to a hefty 4.4 million. This figure is impressive in isolation. However, the true extent and magnitude of T-Mobile's turnaround is perhaps best viewed through what's in many ways the lifeblood for major telecom players: postpaid wireless subscribers. In the fourth quarter, T-Mobile added 800,000 branded postpaid wireless users. This represents a 34% increase from the third quarter of 2013 and an astounding improvement from T-Mobile's loss of 511,000 branded subscribers in the fourth quarter of 2012.  

So, how has T-Mobile executed such an impressive 180-degree turn in so little time?

Attacking the old guard
As part of its comeback strategy, T-Mobile has put the industry old guard -- primarily AT&T, and to a lesser extent, Verizon and Sprint -- directly in its crosshairs.

The centerpiece of T-Mobile's assault on the U.S. wireless industry has been its "Un-carrier" plan that it unveiled last year at CES. As part of the new marketing push, it has been eliminating fees that wireless companies such as AT&T include as part of their wireless plans like annual service contracts, free international charges, and early contract termination fees. 

Telecom companies like AT&T have taken notice of T-Mobile's recent success and decided they need to return fire. Recently, AT&T announced that it would offer customers as much as $450 in credits in order to switch from T-Mobile to AT&T's wireless services. Clearly, there's isn't much love lost between the two. 

However, T-Mobile, never one to go down without a fight, countered AT&T's moves quickly. This Wednesday, T-Mobile announced that it would pay users as much as $650 in total compensation in order to ditch their carriers in favor of its own services. Many already questioned how long T-Mobile's price competition could go on against its deeper-pocketed rivals like AT&T and Sprint.

T-Mobile's comeback in the U.S. telecom market has been nothing if not brash, led by outspoken CEO John Legere. And T-Mobile appears intent on keeping the pressure on its industry rivals for the foreseeable future.

This week at the Consumer Electronics Show in Las Vegas, Legere remarked, "We are either going to take over this whole industry, or these bastards are going to change." 

Either way, T-Mobile's resurrection in the U.S. telecom space will certainly be interesting to watch for investors and consumers.

One must-watch stock for the New Year
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Fool contributor Andrew Tonner has no position in any stocks mentioned, and neither does The Motley Fool. 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." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

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.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information