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Instant Analysis: T-Mobile Launches New Set of Family Plan Promotions

By Evan Niu, CFA – Feb 3, 2016 at 3:00PM

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The wireless carrier introduces a fresh set of promotions for its most valuable customers.

What happened?
Un-carrier T-Mobile (TMUS -0.35%) has announced a new set of promotions targeting data-hungry family plans. The company says it is celebrating a recent report from OpenSignal that states how T-Mobile's LTE coverage is rapidly approaching No. 1 carrier Verizon's.

A family plan with four lines can now have unlimited 4G LTE data for $150 per month, with each additional line costing $30 per line. That reduces the price by approximately $70. Separately, T-Mobile is now also offering a family plan with four lines with 10GB of data per line for $120 per month.

Does it matter?
T-Mobile has made it clear that it will not let up with its aggressive promotions. The company regularly runs promotions in order to win over customers, and the new deals are just the latest in a long string of Un-carrier moves.

Family plans are extremely important to wireless carriers, because retention rates tend to be much higher than individual lines. It's much more trouble to switch a family plan with multiple lines than it is for a single person to jump ship. On top of that, average revenue per account is much higher, particularly for accounts that use a lot of data. Targeting family plans that consume a lot of data is a smart promotion, and it's precisely these types of deals that help T-Mobile maintain its momentum with postpaid customer additions.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool recommends Verizon Communications. 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.

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