T-Mobile US Inc.'s New Cheap Plans Keep the Carrier One Step Ahead of Sprint

By Markets Fool.com


Source: T-Mobile.

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T-Mobile is at it again. The self-proclaimed un-carrier just made its prepaid wireless plans more enticing, adding increased pressure to prepaid competitorSprint at the same time.

Starting this week, T-Mobile's Simply Prepaid plans will have more high-speed data for lower prices than ever before, though the data speeds are slowed after a certain point.

Here's a quick breakdown of what they'll look like:

Cost

Talk

Text

4G LTE Data
(unlimited slower data)

$40

Unlimited

Unlimited

1 GB

$50

Unlimited

Unlimited

3 GB

$60

Unlimited

Unlimited

5 GB

Source: T-Mobile.

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"While Simply Prepaid has fewer bells and whistles, it comes with lower prices and everything else prepaid customers want, including the nationwide 4G LTE network designed Data Strong," T-Mobile said in a statement.

Those missing "bells and whistles" are data tethering, free music streaming, free international data roaming, and the new Data Stashoption.

T-Mobile already has a strong pre-paid market with its MetroPCS brand, so why introduce the new plans? Because over the past few years T-Mobile has built a very strong brand, and the company is looking to capitalize on that even more with prepaid customers.

Don't count out the incremental revenue
Back in 2013, T-Mobile upped its prepaid game when it purchased MetroPCS and acquired nine million prepaid customers in the process.

Here's what the company's before and after prepaid subscriber numbers look like:

Source: T-Mobile.

In addition to the MetroPCS purchase, T-Mobile's also increased its own prepaid numbers, adding 1.2 million in 2014.

Both the MetroPCS purchase and the T-Mobile postpaid adds helped push the un-carrier ahead of Sprint in prepaid numbers, with T-Mo taking the top prepaid carrier spot away from Sprint back in August.

But postpaid plans (the more traditional monthly plans) are typically more lucrative for wireless carriers. So why all the fuss about the prepaid market?

As wireless industry analyst, William Howrote for FierceWireless a few months ago,

"It serves the need for those who are credit challenged, the casual user who don't [sic] want postpaid commitment, or the emergency-only user." He noted that these types of plans are still very relevant -- and for T-Mobile that's apparent in its yearly prepaid revenue.

Here's the breakdown of the un-carrier's prepaid revenue over the past three calendar years:


Data source: SEC Filings.

T-Mobile hasn't reported full 2014 earnings yet, so we'll have to wait and see how T-Mobile's own 1.2 million prepaid adds helped this past year. But as the company moves further in 2015, the Simply Prepaid plans could help give T-Mobile an even bigger edge against Sprint, because they offer unlimited data. As fellow Fool Dan Kline recently wrote, "Sprint has the lowest-price plan and offers a better price as data increases, but it doesn't match T-Mobile's unlimited (albeit slower) data offer."

This isn't over
T-Mobile new Simple Prepaid plans come just as Sprint's CEO, Marcelo Claure, said earlier this month that Sprint added 400,000 prepaid subscribers in Q4 2014, while T-Mobile added just 266,000. Sprint is fighting to regain its position in the wireless industry, and gaining back prepaid ground is part of that. But for now, T-Mobile remains the dominant prepaid carrier, and this latest Simply Prepaid revamp should keep the company one step ahead of Sprint.

The article T-Mobile US Inc.'s New Cheap Plans Keep the Carrier One Step Ahead of Sprint originally appeared on Fool.com.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.