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T-Mobile Announces Holiday Promotions

By Evan Niu, CFA – Nov 16, 2016 at 1:55PM

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The Un-carrier keeps up the pressure.

Image source: T-Mobile.

What happened?

Un-carrier T-Mobile (TMUS -0.77%) has announced a handful of promotions that will go live this weekend in what the company is calling "Magenta Friday," a week ahead of Black Friday. T-Mobile is offering two free lines for family plan customers that sign up for the new T-Mobile One plan, which offers unlimited high-speed data (with some catches), talk, and text. CEO John Legere also added that the promotional pricing is good "FOR LIFE."

The following week, T-Mobile will also offer additional discounts and promotions on mobile devices, including smartphones, tablets, virtual reality headsets, and wireless speakers. Many of the product discounts, which offer free gadgets in many cases, are given via monthly bill credits.

Does it matter?

This is more of the same from the Un-carrier, and that's a good thing. T-Mobile has made incredible progress over the past couple of years, thanks in large part to regular, ongoing, and aggressive promotions that entice customers to switch from rivals. In its SEC filings, T-Mobile notes that revenue growth is "driven by strong customer response to our Un-carrier initiatives and promotions for services and devices."

Shares now trade near all-time highs as T-Mobile continues to grow its subscriber base while churn keeps declining (branded postpaid phone churn last quarter was 1.32%, down 14 basis points from a year prior). Declining churn shows that T-Mobile is doing a good job at retaining the customers that it is winning over. It's no coincidence that many of its promotions must be realized via monthly bill credits, which serves as an alternative way to tether customers now that two-year service contracts are effectively dead (killed by T-Mobile, no less).

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool recommends T-Mobile US. 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.

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