T-Mobile has been doing all the right things as of recently, and their Q4 earnings report shows that. Verizon it seems hasn't been doing the right things lately, and their Q4 report showed that. It's more than just the numbers behind all of this, T-Mobile's strategy took the industry by surprise.
T-Mobile has been flaunting their Un-carrier initiative, with Un-carrier Next that includes T-Mobile ONE which is one plan, one price, all the time. T-Mobile also offers nothing but unlimited data plans now, with fine print of course, but it is really unlimited. Verizon has been focusing on other things other than wireless; they've dealt with mergers, fiber, Internet TV, and much more and seem to have leveled off a bit with their wireless strategy.
Verizon for years now has been the number one wireless carrier in the US, and it almost seems they got so used to it, as did AT&T being 2nd, they let T-Mobile sneak in through the back door. Wait, what about Sprint? Exactly what about them? They had the chance to be in T-Mobile's position and blew it. Verizon's Q4 report, per Business Insider, shows their struggles. Verizon first missed Wall Street expectations sending their shares down, and their revenue fell for the third straight quarter from $34.25B to $32.34B. Something is obviously going on there. Churn (customer defections) also increased for Verizon by 1.1%.
Verizon must have realized T-Mobile snuck in and they brought back their unlimited data plans. Here is a video from CNBC on the plan:
Well enough about Verizon and let's talk about what put T-Mobile on Verizon's radar. According to Fox Business, T-Mobile posted an industry leading 2.1 million total net adds, totaling off 2016 with 8.2 million adds for 2016. Better yet, T-Mobile's revenue increased by 16% in 2016 to $37.2 billion according to Investor's Business Daily.
$37.2 billion, that's some hefty wads of cash higher than $32.34 billion of Verizon. T-Mobile understands what customers truly want; affordable plans, reliable coverage, and unlimited everything. Sprint is the only carrier that can compare in terms of those three, but Verizon and AT&T own the market and have the infrastructure that dominates, but that did not intimidate T-Mobile one bit.
According to BGR, T-Mobile is tied with Verizon in connection speed, but losing in reliability and coverage, Verizon gets an LTE signal 88.17% of the time, compared to T-Mobile's 86.60%, but very close. T-Mobile delivered to their customers and have found a way to compete with the giants, and so far it's paying off, but for how long?
T-Mobile needs to keep doing what they're doing to stay relevant in the market and competing with Verizon and AT&T. Verizon felt the heat from T-Mobile and responded by bringing back their unlimited data plans, with fine print of course, but that's the way it goes. T-Mobile however punched right back according to lifehacker. T-Mobile expanded their T-Mobile One plan by offering unlimited HD streaming and 10GB of data allotment to share with any T-Mobile connected device. The plan starts at $70 a month.
Verizon needs to get back to work and start giving their customers what the want or may want. Verizon recently rolled out a 5GB for $55 plan, but the only way you can get is if you enroll in auto-pay which isn't the way to get people to buy a plan, by forcing them to do something else. If Verizon doesn't wise up quick, T-Mobile is only going to get larger and their parent company Deutshce Telekom of Germany could take charge of the US telecom industry. This is good though, an ensuing price war shows competition is stirring in an industry thought to have little competition and choice, it now seems that is all changing and is good for consumers and the industry as a whole. There will be winners and losers always, but that shows a capitalism is working.
Here are the 1 month stocks for Verizon and T-Mobile per Google (click for a larger look):