Analysis: T-Mobile strategy could eat into business of AT&T, Verizon

Thu Oct 24, 2013 3:29pm EDT
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By Sinead Carew

NEW YORK (Reuters) - T-Mobile US Inc is expected to post stronger subscriber growth than its larger rival AT&T Inc for the second straight quarter, suggesting the upstart carrier's bold new customer policies could shake up the U.S. mobile market.

Intensifying competition from T-Mobile, the No. 4 wireless provider, and a challenges from No. 3 Sprint Corp, may deplete revenue growth at AT&T and the market-leader Verizon Wireless at time of slowing overall growth.

Since March, T-Mobile has positioned itself as a consumer champion by promising more flexible policies and cheaper prices, aiming to address complaints about what Chief Executive John Legere calls a "stupid, broken, arrogant" industry.

The strategy seemed to bear fruit quickly as T-Mobile's second-quarter subscriber growth ended four years of losses and beat analyst estimates and AT&T's growth.

Now T-Mobile is expected to report another 444,000 net additions in its third-quarter report due November 5, according to the average estimate from seven analysts contacted by Reuters. Some of them say the estimates may prove too conservative.

By comparison, AT&T reported 363,000 net subscriber growth on Wednesday. And without tablets, analysts estimated that AT&T would have had a net subscriber loss.

While T-Mobile likely picked up customers from all its rivals in the quarter, AT&T is particularly vulnerable because its customers can easily move their phones to T-Mobile's service as both companies use the same network technology.

"T-Mobile is taking market share from everyone," said Craig Moffett an analyst at MoffettNathanson but, he added that it is "specifically targeting AT&T at every turn."   Continued...

AT & T and T-Mobile logos are seen posted on the wall of a subway station at West 14th street and 8th avenue in New York September 27, 2011. REUTERS/Shannon Stapleton