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Roam If You Want To: T-Mobile Provides Free International Roaming

By Daniel Kobialka - Mar 26, 2014 at 3:00PM

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Unlimited data and texting in more than 120 countries gives global travelers new reasons to switch to T-Mobile, which may help this company's stock value rise.

T-Mobile ( TMUS 2.18% ) wants your business, and the company is giving rivals' customers more reasons than ever before to switch carriers. According to CNNMoney, T-Mobile recently began providing free international roaming for frequent travelers as part of its Simple Choice plan.

For those who travel outside of the U.S. and are signed up for this plan, they can enjoy unlimited data and texting in more than 120 countries. In addition, under this plan, calls cost only $0.20 per minute, providing a cheaper alternative to similar plans offered by AT&T ( T 1.78% ) and Verizon ( VZ 1.36% ).

When in roam...
Free international roaming is a key differentiator that could help T-Mobile separate itself from rivals. Currently, T-Mobile is the only carrier that provides unlimited data and texting to customers around the globe. If T-Mobile continues to improve its service, the company could profit. 

While T-Mobile provides complementary data and texting outside of the U.S., it only offers these services at 2G speeds. As a result, the speeds at which these services operate can be slow, especially when compared to 3G and 4G networks. 

Nevertheless, the fact that T-Mobile offers free international roaming gives it a competitive edge. To keep up with T-Mobile, AT&T customers can sign up for a GoPhone plan, which enables them to pay for talk, text, and data services in up to 225 countries. Verizon, meanwhile, provides international data and texting in more than 150 countries, yet charges customers for both services.

Competition between T-Mobile, AT&T, and Verizon is fierce, and each company is ready to take drastic measures to attract new customers to its services. While T-Mobile now offers free international roaming, the move could lead AT&T and Verizon to lower their service prices or offer additional incentives to customers in hopes of boosting sales.

Don't call it a comeback
T-Mobile looked dead in the water in the fourth quarter of 2012, posting -9.6% service revenue growth for the time frame. However, T-Mobile has made a strong push over the past year, improving by 8.5 percentage points in this category year-over-year.

An aggressive marketing strategy has helped T-Mobile increase sales, and T-Mobile has no plans to slow down in the near future. In fact, the company has offered to pay new customers' service cancellation fees if they drop their old carriers, has eliminated early termination fees and overage charges, and no longer requires a traditional two-year contract. So far, the moves have paid off big, and are likely to create more competition among cell phone carriers. 

Meanwhile, T-Mobile, AT&T, and Verizon may bring out the best in each going forward. T-Mobile has shown that it is willing to take chances to improve sales, and AT&T and Verizon could soon follow suit as the cell phone carrier battles heat up over the next few months.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
TMUS
$112.77 (2.18%) $2.41
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$51.42 (1.36%) $0.69
AT&T Inc. Stock Quote
AT&T Inc.
T
$23.46 (1.78%) $0.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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