New T-Mobile Offering Compared to Other Carrier Options

T-Mobile Earnings Preview: What to Expect in 2Q15

(Continued from Prior Part)

Legere targets AT&T with new T-Mobile offering

In the last part of this series, we looked at the recent launch of T-Mobile’s (TMUS) Mobile without Borders initiative. At the announcement of the launch on July 9, 2015, John J. Legere, T-Mobile’s chief executive officer and president, talked about the initiative’s competitive positioning.

Legere said, “After spending billions buying up Mexican telecoms, AT&T’s CEO is promising ‘the first seamless network covering Mexico and the U.S.,’ something ‘unique’ that ‘nobody else will be able to do for the consumer.’ So much for that. They won’t be the first. And they won’t offer Canada for free.”

Pricing of T-Mobile’s new offering

According to T-Mobile, its Simple Choice plan with Mobile without Borders trumps the price of other large US wireless companies’ entry-level postpaid options. In terms of international long distance calling charges, these options include AT&T’s (T) World Connect Value, Verizon’s (VZ) More Everything, and Sprint’s (S) Mexico-Canada Plus plans.

In terms of international roaming charges to Mexico and Canada, these options include AT&T’s Passport, Verizon’s Mexico & Canada Plan, and Sprint’s International Value Roaming plan.

According to T-Mobile, the Simple Choice plan with Mobile without Borders will have $0 cost—subject to conditions—in international long distance calling and texting charges to Mexico and Canada. Customers also won’t have to pay international roaming charges when they use T-Mobile services in these countries.

Costs associated with comparable options available from AT&T, Sprint, and Verizon are in the range of $20 (excluding per-minute call charges) to $35 and above. So T-Mobile’s proposition of free calls and text messages to Canada and Mexico looks like an attractive option for consumers.

Instead of investing in T-Mobile’s stock, you may take a diversified exposure to the company by investing in the iShares U.S. Telecommunications ETF (IYZ). IYZ held ~5.6% in T-Mobile as of June 30, 2015.

You may even take an extremely diversified exposure to the company by investing in the iShares Russell 1000 Value ETF (IWD). The ETF held ~0.1% in T-Mobile at the end of June.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - T-Mobile: Expect Solid EBITDA Growth in 2Q15

• Part 2 - T-Mobile Revenue: Robust Growth Anticipated in 2Q15

• Part 3 - T-Mobile Subscribers, the Fastest Growing Postpaid Base