NEW YORK – On Wednesday, the Associated Press reported that T-Mobile (NYSE:TMUS), the nation’s number four wireless carrier, announced that they are eliminating fees for using data and texting services in more than 100 countries and capping charges for international voice calls.
The new program will begin on October 31, for customers on the company’s Simple Choice plan. The move is seen by analysts as an attempt to win market share through differentiation, by calling themselves the ‘Un-carrier.’ However, it is unclear whether the move will work. Even though T-Mobile touts a robust 4G network, the company’s signal coverage still lags behind bigger carriers such as AT&T (NYSE:T), Verizon (NYSE:ZV), and Sprint (NYSE:S).
In March, T-Mobile announced they were dropping conventional two-year service contracts in favor of selling phones on installment plans and in July, they announced a frequent upgrade program that let customers change phones up to twice a year. While programs made news at the time, both AT&T, Verizon, and Sprint quickly announced their own programs, as such the impact of T-Mobiles plans has largely had little impact on their market share.
In an interview on Wednesday, T-Mobile CEO John Legere admitted that roaming fees are immensely profitable for the wireless industry, but T-Mobile has not benefitted much because it does not have many business customers who travel. With the new program, Legere said, the company is hoping to gain subscribers without sacrificing much revenue.
So ultimately, his strategy might be to bleed the other carriers in an attempt to force them to keep their own customers. This might work in the enterprise market, but T-Mobile will also have to upgrade their domestic network make any real inroads.
T-Mobile has seen its subscriber base grow this year, but many analysts believe this is largely due to the introduction of the iPhone on the T-Mobile network. The company also announced on Wednesday that they have signed up more than 200 million 4G LTE customers in 233 metropolitan areas. While Legere admitted that the company needed to build out their rural coverage, he said T-Mobile is fast in major cities. T-Mobile has its headquarters in Bellevue, Washington and is under the control of Germany’s Deutsche Telekom AG (DE:DTE).
Shares of T-Mobile closed down 1.78 percent on Wednesday at $ 25.36.