Deutsche Telekom appointed John Legere as the CEO of T-Mobile USA just over a year ago, in Sept. 2012. Legere is unlike most other chief executive officers, and it's refreshing. He talks to the press and consumers on Twitter, directly, instead of focusing solely on Wall Street analysts, and his message is more than clear: forget everyone else and go with T-Mobile. He's not shy, and he's shaking up an industry that otherwise left T-Mobile to die following a failed acquisition by AT&T.
Since Legere joined the carrier, T-Mobile's stock price has bounced around between $22 and $27, though his strategy may just now be starting to pay off. T-Mobile added the iPhone 5 earlier this year and, as of yesterday, will soon offer a complete portfolio of Apple products including the latest iPhone 5c, iPhone 5s, iPad Air, iPad mini and iPad mini with Retina display. The carrier also went from offering an HSPA+ network that lagged behind Verizon and AT&T to an LTE network that covers 200 million people in 233 metropolitan markets. While that still lags between Verizon and AT&T, it's now ahead of the 185 markets covered by Sprint's LTE network, and is a remarkable figure.
The industry, likewise, has reacted to Legere's "Un-Carrier" strategy, though whether other carriers will ever admit it or not is up for debate. T-Mobile started its drive with "Un-Carrier" plans that make it easier to buy a phone off of a contract (enough to boost sales about 1.1 percent), though you're still required to pay a down-payment of some sort (sometimes it's free) and 24-monthly payments, which is ultimately a form of a contract no matter how you look at it. The point is, Legere made headlines, and he got the industry talking about T-Mobile more than ever.
Legere was also the first to implement an upgrade option that allows consumers to move to a new smartphone every six months. We think these plans are generally a rip-off, but Legere created a ripple effect that resulted in new plans from AT&T (NEXT) and Verizon (Edge) that offer similar options. Legere has since pushed T-Mobile with other "Un-Carrier" moves, including free roaming in over 100 countries and new tablet plans that offer 200MB of data each month. It's not a lot of data, but it's free, and that's better than what AT&T, Verizon and Sprint offer.
But moving back to my introduction, Legere isn't just shaking up the industry with his new plans and "Un-Carrier" approach. It's also his attitude toward consumers, the press, and to other carriers. He doesn't shy away from his dislike for AT&T and Verizon, and doesn't ever mention Sprint, as if to suggest the carrier doesn't even exist. He tries, and does so quite successfully, to act as a friend to the consumer.
You won't ever find AT&T, Verizon or Sprint's CEO addressing questions on Twitter, but that's exactly what John Legere did today. He fielded answers from people asking questions about his new tablet plans, ultimately coming down to a personal level with consumers who might not otherwise see any interest in T-Mobile. The company called it a "Tweet Conference," which was the first ever we've seen from a U.S. carrier. And that goes far, because when you can connect with the head of a company, you feel they care, no matter how much of that is genuine or just a sly but brilliant PR move.
But what about from a business perspective? Ultimately that's where the success of a CEO is judged – is Legere making Deutsche Telekom and T-Mobile investors money, or losing it? In 2012, T-Mobile was still bleeding customers to competing carriers, largely because it didn't offer the iPhone. During the second quarter of this year, however, T-Mobile added 685,000 branded postpaid customers with 1.1 million net additions. By comparison, T-Mobile lost 200,000 customers during the same quarter in 2012. Unfortunately, the carrier also lost $16 million during the same time period. Why?
That's the cost of growth. T-Mobile spent $1.1 billion during the quarter, in addition to $308 million in cash to acquire MetroPCS, building out its 4G LTE network, an expensive but necessary endeavor that needs to continue as it catches up with Verizon and AT&T. Without that spending, T-Mobile's 4G LTE network would lag far behind Verizon and AT&T and, ultimately, it would begin to lose customers seeking faster data speeds on larger networks.
Those customers who joined during the second quarter will eventually begin to pay off for T-Mobile. Service revenues, for example, increased 8.6 percent in Q2 2013 over Q2 2012. Those are the revenues T-Mobile makes from its customers. It also noted that total revenues increased 27.5 percent, mainly from new customers acquired from MetroPCS, and a total revenue of $6.23 billion, up from $4.68 billion during the second quarter of 2012.
Another figure worth noting is T-Mobile's average revenue per user (ARPU), which is a fancy way of noting how much T-Mobile earns off of each customer. The carrier said its ARPU fell 6.5-percent to $53.60. That's a direct result to Legere's "Un-Carrier" approach. If you cut the price of plans, you earn a lower ARPU with the hopes of attracting more customers to offset your losses.
That's why T-Mobile is pushing forward with Legere's "Un-Carrier" approach. The more he can disrupt the industry and attract new customers away from competing carriers, the more T-Mobile's lower-cost plans are going to pay off in the long haul. As a result of these new plans, T-Mobile expects to gain a total of between 1 million and 1.2 million branded post-paid customers for the entire year.
So is the work of Legere and his team paying off? Well from a purely profit-based standpoint, not yet. But the keyword is yet, because T-Mobile is adding customers, thanks to Legere's strategies that appear to be working quite well. Moving forward, I think we'll see T-Mobile continue to land on our radar, though this all comes at a risk.
If Verizon, AT&T and Sprint react to Legere's moves with similar options, and I think he's largely betting they won't, then customers will likely stick with their current carrier. Likewise, T-Mobile needs to continue to spend in order to catch up to AT&T and Verizon, and that's going to continue to cost T-Mobile the cash that it's earning from new customers.
I don't think Legere is done yet. While I can't predict what his next move will be, I think we'll continue to see him cater to customers with new value propositions in the form of an "Un-Carrier 4.0" announcement. T-Mobile's days of sitting quiet while it fumbles around and loses customers are gone, that's for sure.
The Galaxy S20 Ultra's Space Zoom camera is amazing and a bit creepy
The Galaxy S20 Ultra supports up to 100X zoom, which Samsung calls Space Zoom, but is it any good? Can a phone really product usable photos at 100x zoom? We've got our Galaxy S20 Ultra already so join us to find out!
Win an iPhone, iPad and Apple Watch with the Reader's Choice giveaway!
What's the best phone of 2019? Is it the iPhone 11 Pro, Pixel 4 or OnePlus 7T? What about the best laptop, games console, tablet and more? Vote NOW in the Reader's Choice awards and win BIG in time for the holidays!
Here are the best products from IFA 2019!
Here are the products announced at IFA 2019 that were worthy of our Best of IFA 2019 awards. Also featuring MrMobile's single best product at the show!
Get your doodle on with a high-tech drawing tablet
Aching to incorporate freehand lines into your digital creations? Sounds like you need a drawing tablet! We've put together the best models for your perusing pleasure.