T-Mobile adds free streaming for Apple Music use, iPhone upgrade plan
T-Mobile (TMUS) offered good news for its customers who are also big fans of Apple (AAPL) with the latest twists in its "Uncarrier" campaign on Tuesday.
The mobile carrier announced that customers will be able to listen to Apple's new music service without the streaming songs counting against their monthly data allowance. That makes Apple Music among the best known of the nearly three dozen streaming services in T-Mobile's "Music Freedom" program, which already include Spotify, Pandora (P) and Google Music (GOOGL).
And customers participating in T-Mobile's frequent phone upgrade plan, Jump on Demand, got a guarantee that they'll be able to switch from a current iPhone to a new phone Apple releases later this year without increasing their monthly payment. T-Mobile last month revamped the Jump on Demand program, adding a $15-per-month option to buy an iPhone, about half what other carriers typically charge. A customer who ordered an iPhone 6 under the $15 plan will be able to trade it in for a newer model from Apple without any activation fee or other additional charges, T-Mobile said.
CEO John Legere has made catering to iPhone lovers a top priority since he took over in 2012 and brought T-Mobile out of a tailspin following its failed merger with larger rival AT&T (T). Lately, Legere has increased the frequency of new offers in his Uncarrier campaign to shake up the mobile market, three weeks ago slashing the cost of calling to and from Canada and Mexico, for example. He started back in March 2013 by eliminating the two-year contracts that the industry had used to lock in customers.
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The moves still appear to be working. T-Mobile pre-announced some second-quarter results earlier this month, reporting that it added 2.1 million new customers. That may be enough to move Legere's company past Sprint (S) for third place in the U.S. market. At the end of the first quarter, the two carriers were separated by only about 300,000 customers. Sprint reports its second-quarter results on Aug. 4, with T-Mobile reporting on Thursday.
Tuesday's moves weren't as significant as some of Legere's prior announcements, Jan Dawson, chief analyst at Jackdaw Research, said, describing the news as "minor tweaks to existing programs."
"It's no surprise that T-Mobile is adding Apple Music, which is easily the biggest launch ever in this category," Dawson said. "It'd be bigger news if it wasn't adding it."
Outspoken CEO
Legere and Sprint CEO Marcelo Claure had an unusually blunt public Twitter spat last month. "I am so tired of your Uncarrier bulls***," Claure tweeted, prompting Legere to retort: "you mad bro?"
Legere's outspokenness has won him legions of fans on social media and garnered considerable free publicity for the company. Still, some analysts question how much longer T-Mobile's parent Deutsche Telecom will support Legere's sometimes costly efforts to compete against Claure's company and much larger rivals AT&T and Verizon Communications (VZ). And despite extensive efforts, Legere has yet to convince federal regulators in Washington to change airwave spectrum auction rules more in T-Mobile's favor.
Shares of T-Mobile lost 2.4% to close at $36.50 on Monday. The stock, which is the subject of frequent takeover rumors, is up 35% so far this year, as Legere's strategy continues attracting new customers at an industry-leading pace.
T-Mobile treats customers enrolled in the Jump on Demand upgrade plan more like car-lease customers than the way other phone companies handle their installment-plan customers. Jump on Demand customers agree to make 18 equal monthly payments. At the end of the plan, they can make a final, large payment to buy their phone outright or hand in the phone without owing anything further. Just like with car leases, the model allows T-Mobile to offer a lower monthly fee than if the customer paid the full cost of the phone from the start.
Most carriers make customers cover the full price of a new phone in equal amounts over 20 or more months -- an unsubsidized iPhone 6 starts at $650 from an Apple store. T-Mobile is also letting Jump on Demand customers upgrade to a new phone up to three times a year, though each switch restarts the 18-month obligation.
The new iPhone guarantee applies only to customers on regular monthly plans, not prepaid customers, T-Mobile said.
