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Is the T-Mobile UnCarrier Effort Sustainable?

T-Mobile's latest move: music streaming that doesn't eat into data plans. Source: T-Mobile

There seems to be no end in sight for T-Mobile's (NYSE: TMUS  ) uncarrier events. The nation's fourth-largest wireless carrier just launched unlimited music streaming for multiple apps that won't count against data plans, a new partnership with Rhapsody to bring ad-free music streaming for free to unlimited data customers, and a new program to test drive  the Apple (NASDAQ: AAPL  ) iPhone 5s before buying it.

All of T-Mobile's efforts have been aimed at taking on rival AT&T and others, while building a case for a merger with Sprint (NYSE: S  ) . But can the company keep it up?

More music, same data
While many wireless carriers have offered their own versions of free music streaming, T-Mobile's new service allows any of its Simple Choice subscribers to access Pandora, Rhapsody, iHeartRadio, iTunes Radio, Spotify and others -- all without eating into their monthly data plans.

The company also said it's teaming up with Rhapsody to offer its own music streaming unRadio app, to bring ad-free music streaming to its unlimited data customers.

Both announcements are pretty significant considering streaming music can take up a substantial amount of data on wireless plans, and the fact customers can choose which music app they want to listen to. 

Testing the iPhone
The second part of T-Mobile's latest efforts to woo new customers comes in the form of a test drive of Apple's iPhone 5s. Starting later this month potential customers can request an iPhone 5s from T-Mobile, use unlimited data and service nationwide for a week and then drop off the phone at any T-Mobile store once they're done, free of charge.

In a press release, T-Mobile said, "Nearly half (46%) of wireless customers say they've signed up with a carrier and then wanted to leave, and one in 10 have actually left within the first 30 days of making a switch." The new iPhone test drive allows users to try out their network before they commit.

Obviously, T-Mobile hopes people will keep the phone. The company expects at least one million people to sign up for the program within a year.

Foolish thoughts
T-Mobile's uncarrier efforts have been massively popular with customers, and have helped spur millions of additional subscribers for the company. But all of that has come at a cost. In Q1 2014 the company added 2.4 million customers, but that number pushed T-Mobile to a loss of $151 million for the quarter. A year earlier, the company had a profit of $106 million for Q1.

Adding new customers is never going to come cheap, but the latest moves by T-Mobile brings into question whether the company's subscriber growth is sustainable. As a T-Mobile customer myself, I like the additional free data I've been given, and now data-free music streaming. But investors should be cautious. I think T-Mobile is amassing as many subscribers as possible as it looks for Sprint to make a bid on the company, and that's a big bet.

The aggressive strategy could work if Sprint makes a bid and the FCC approves a sale, but getting that approval is a big unknown. The FCC has been pleased with T-Mobile's latest subscriber growth and almost appears to be taking credit for T-Mobile's innovation after they struck down AT&T's bid to buy T-Mobile several years ago. The next few years could either bring a bid from Sprint, or a pullback on innovations from T-Mobile in order to save money. Either way, T-Mobile has to start making significant financial gains from its new customers, or change how it does business.

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