T-Mobile US Inc (NYSE:TMUS) has no plans to let competing rivals take its top spot in the prepaid market. Days after the launch of the “Simply Prepaid” plan, the carrier’s flagship prepaid brand called the MetroPCS has announced new promotions aimed at maintaining the subscriber momentum.
For a limited time, MetroPCS is cutting the price of its $60 monthly unlimited data plan by $10 for users who sign up before April 5. Unlike the promotional plans of other carriers, people who sign up for the plan before the date can continue to enjoy the discounted price. This is the lowest priced 4G LTE unlimited data plan, especially in the prepaid market. However, only users who have LTE-capable GSM phones are eligible to sign up for the $50 promotional plan. CDMA phones and bring-your-own-device phones are not eligible for the plan, according to T-Mobile.
T-Mobile CEO John Legere stated: “MetroPCS has a solid track record of giving customers the best value in prepaid wireless and schooling the competition at the same time,” and, “MetroPCS is at it again today with 4G LTE Unlimited for just $50 bucks, the best value anywhere!”
To sweeten the deal for users, T-Mobile is giving all MetroPCS customers, who have subscribed to a 4G LTE data plan, an additional gigabyte of high speed LTE data. MetroPCS LTE data plans start from $40 per month, and offer unlimited talk and text and 2GB of 4G LTE data, up from 1GB previously. Meanwhile, the $50 plan, which previously offered 3GB of data, has now been increased to 4GB.
Price Wars Come To Prepaid
While price wars were previously common in the postpaid market, with the maturation of the postpaid segment, wireless carriers are eyeing the prepaid market for future growth. In the past few days, Verizon Communications Inc. (NYSE:VZ), Sprint Corporation (NYSE:S), and T-Mobile have been launching new prepaid plans, or have been making various changes to their prepaid offerings to entice subscribers.
T-Mobile launched its Simply Prepaid plan last week, with data plans starting at $40 per month. It also offers the Simple Choice prepaid plan, which starts at $50 per month.
Sprint also launched its first-ever customizable family share prepaid data plan, allowing users to share data with family and friends. While the plan gives users the ability to share data, (which was previously limited to postpaid users), it also gives them the flexibility to allocate data among the members.
Verizon, which is usually known for staying away from price wars, also doubled the data allotment on its AllSet prepaid plan, from 500MB to 1GB. The carrier is also offering free 500MB of data to users who sign up for its auto-pay option.
With 16.32 million users, T-Mobile currently has the largest prepaid subscriber base. However, in the past few months, Sprint’s promotional activities have been causing trouble for T-Mobile. Both companies announced their preliminary subscriber results earlier this month; Sprint reported 410,000 net subscriber additions during the fourth quarter (4Q) of 2014, while T-Mobile added 266,000 prepaid users during the same period. As such, T-Mobile’s latest promotions have been aimed at continuing its subscriber momentum.
The margins of wireless carriers have badly been affected as they keep slashing prices or offering more data in their quest for subscriber acquisition, which raises questions about the sustainability of the price cuts in the long run. While T-Mobile maintains (to the delight of its subscribers) that its “Un-carrier” initiatives are here to stay, investors have been worried about the carrier’s bottom-line.